By Seth Carpenter, Morgan Stanley chief economist
Last year, growth surprised to the upside thanks to a continued fiscal impulse and a surge in labor supply from immigration, but recent prints have raised questions about continued strength. The inflation scare of the first quarter is waning, and markets are increasingly asking questions about the trade-offs and intersections of inflation and growth. In last week’s Sunday Start, my colleague, Mike Wilson, wrote about the implications of slower growth for equity markets.
Let’s try to unpack what is going on from an economist’s perspective. How should we interpret slower growth in this cycle, which has been so different from past cycles? What is the trade-off with inflation? And what would a slowdown mean for the Fed?
