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Morning Notes — Global Growth Inflection

Global Growth Inflection

March 29, 2021

The rapid acceleration we’ve been expecting in global growth has started.  US credit card spending data accelerated 1800bps last week and mobility data is also ramping.  US flash PMIs for March reached their highest level in more than a decade and we expect a sharp uptick in global manufacturing PMI this Thursday.  The February number already showed a global economy in rapid expansion territory at 53.9. Meanwhile goods pricing is already lifting on the growth story. Expect to see double-digit gains in headline global CPI over the next two quarters and core goods pricing running at a 20-year high.  The accident in the Suez Canal may be helping, but bottleneck pressures have been building for several weeks with container ships backed up at all major US ports. Goods pricing is an important part of our reflation theme, but services pricing, which has yet to inflect higher, is more important.  Expect US Q2 year-over-year headline inflation close to 4% and a core rate close to 2.5%.  Yes, there’s a lot of base effect in the year-over-year numbers, which makes the sequential growth rates far more important.  There’s a good chance we’ll see >2% sequential growth in core PCE over the next two quarters.

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