Pimco mener, den megen snak om øget inflation er overdreven, og at det tilmed skygger for en langt større risiko, nemlig om den finansielle stabilitet. Den enorme opsparing på 1100 milliarder dollar ekstra, der er sket i USA under krisen, ligger hovedsagelig hos de 10 pct. mest velstående, som ejer 90 pct. af aktierne. Hvis de penge sendes i aktier og fast ejendomme og ikke i forbrug, kan det true den finansielle stabilitet, som også centralbanken Fed har advaret om, vurderer Pimco.
Focusing on Inflation May Miss the Bigger Risk
The COVID-19 relief bill has spurred talk of inflation, but financial stability may be a more relevant risk.
Yet that is not to say that we do not see other risks to the U.S. recovery. We would argue that financial stability risks could rise further. With an estimated $1.1 trillion in excess savings currently sitting in checking and savings accounts, it is possible that some of that money finds its way into financial markets, further stretching valuations.
This, compounded with other concerns, reinforces our view that macroprudential policies will likely tighten over the next few years. To ameliorate these risks, the Fed would likely only raise rates as a last resort. Nonetheless, the bigger point is that being overly focused on inflation concerns may miss issues around financial stability that have a greater likelihood of affecting markets.
Embedded in our output gap forecast is also the assumption that consumers won’t spend the brunt of their excess savings, at least not right away. The cumulative excess savings, based on National Income and Product Accounts (NIPA) measurement, is around $1.6 trillion, and the Fed’s Financial Accounts suggest that most of that money is currently sitting in checking and savings deposits. These estimates of excess savings don’t account for unpaid mortgage principal from forbearance, which Black Knight estimates to be worth around $500 billion. Nonetheless, adjusting for that, excess savings of $1.1 trillion is still large.
While it is possible that this money could be spent quickly, we believe the more likely outcome is that it finds its way into real estate investment and/or financial markets.
The Fed’s Distributional Financial Accounts suggest that the excess savings is concentrated on the balance sheets of wealthy households. Indeed, about two-thirds of this $1.1 trillion is held by the top 10% of wealthiest households. This same top 10% group is estimated to account for 90% of equity holdings in the U.S., according to a 2016 report by the Minneapolis Fed.
Financial stability risks “notable”
If this money finds its way into financial markets, it’s possible that it exacerbates financial stability risks. The recent social-media-driven price action in single name stocks, although not systemic, offers a clear example of the potential boom-and-bust behavior that could ensue. And this, coupled with other concerns, could compound the risks to financial stability.
Fed officials have recently raised their assessment of financial stability risks. At the January Fed meeting, the staff characterized the vulnerabilities as “notable” instead of the “moderate” description used in the November financial stability report, citing elevated valuations of corporate bonds, equities, and industrial and multifamily properties; poor balance sheets of small and midsized business; and worrisome leverage at hedge funds.
Furthermore, the Fed’s semiannual monetary policy report released on February 19 discusses “significant structural vulnerabilities” for money market and mutual funds and argues that “without structural reforms, the vulnerabilities demonstrated in March 2020 will persist and could significantly amplify future shocks.”
