Moodys skriver i en analyse:
Deflation Fear Inflates Credit Spreads
Above-average fear of the future now ails financial markets. Despite assurances from the European Central Bank (ECB) that it will do all in its power to avert debilitating price deflation, investors have been shaken by the ECB’s inability to spur sluggish euro-zone expenditures.
In September the annual rate of eurozone’s CPI inflation slowed to 0.3%. However, after excluding a -2.3% yearly plunge by energy prices, the annual rate of eurozone CPI inflation rose to 0.8%. The eurozone has at least avoided the consumer price deflation that generally menaced Japan’s economy from 1999 until 2013.
But making matters worse are the uncertain prospects for emerging markets. The world economy managed to prosper amid 2011’s profound deceleration of euro-zone activity partly because of the robust 6.2% advance by emerging market economies. By contrast, the emerging market economies now grow at a much slower rate of 4.2%.
Fast growing emerging market economies are not immune from price disinflation. Given the seemingly rapid 7.5% annual rate of Chinese real GDP growth, China’s 1.6% annual rate of CPI inflation is surprisingly slow. Again, we are reminded of the global scope of decelerating prices for consumer products.
As illustrated by the US’s recent struggle with home price deflation, lower-than-expected product prices can wreak havoc with debt repayment capabilities. The corporate credit market often frowns upon sales growth that comes at the expense of much thinner profit margins.
PCE Price Index Inflation May Soon Be Closer to 1% than to the Fed’s 2% Target
China’s very low rate of CPI inflation warns of slower price growth for the US. As inferred from the latest drop by energy prices, the US annual rate of PCE price index inflation should soon drop from August 2014’s 1.5% to 1.3% and should finish 2014 closer to 1% than to the Fed’s target of 2%. In addition, the US annual rate of core PCE price inflation should finish 2014 not much above 1.5%. The recent strengthening of the dollar exchange rate should help to import price disinflation from the rest of the world. September’s already low 0.7% annual rate of core import price inflation is likely to move lower.
Ample global slack and a stronger dollar are likely to contain US wage growth, even if, as expected, the US unemployment rate sinks to 5.4% by Q4-2015. Though payrolls have grown by 1.1 million jobs from their previous cycle peak of January 2008, the number of Americans aged 16- to 64-years has expanded by a much greater 7.0 million individuals. Thus, from January 2008 to September 2014 the increase in jobs was barely 15% of the increase in the number of 16- to 64-year old (or working age) Americans.
