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A big difference between today and the 1960s-1970s-1980s: Low indexation of wages to prices
A parallel is often drawn between the present situation and that of the 1960s- 1970s - 1980s : cold war, rising commodity prices and inflation, the need for high public spending. But there is a significant difference between today and the 1960s- 1970s - 1980s : today, wages are barely indexed to inflation. This means that: Inflationary shocks from commodity prices are less likely to lead to high inflation; The cost of commodity price increases is borne by households (or governments if they support household income), not by companies. The problem is therefore either a problem of a loss of growth due to the decline in real wages or a problem of a fiscal deficit, not a problem of a decline in the profitability of companies and their ability to invest.
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Natixis
Based across the world’s leading financial centers, Natixis CIB Research offers an integrated view of the markets. The team provides support to inform Natixis clients’ investment and hedging decisions across all asset classes.
Patrick Artus
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