Conning ConnText Podcast Explains Why Current Inflation May Be Transitory, Ease as “Exhausted” Supply Chains Recover; U.S. Economic Growth Likely Continues into 2022
August 02, 2021
Resurgent Demand Stressed Unready Suppliers, Unsteady Supply Lines
HARTFORD, CT – August 2, 2021 —Leading global investment management firm Conning has posted its latest Conning ConnText quarterly podcast which suggests that inflation is real but transitory and that the “supply chain exhaustion” feeding the price rise will resolve and inflation will ease with it. The podcast also takes a close look at the impact the pandemic had on global supply chains and how those vital commerce links are responding amid resurgent consumer demand.
Rich Sega, Conning’s Global Chief Investment Strategist and host of the podcast, said that monetary policy has “oscillated between easing and tightening and then back again.” Central bankers are trying to keep markets from overheating, but also are looking to be supportive as they see virus variant outbreaks.
“U.S. public fiscal policy tried to boost the demand side all last year by supplanting earnings with handouts keeping personal income high, but the effects weren’t felt until restrictions were lifted,” Sega said. “Supply is now catching up.” He added that divided government may help avoid policies that he thinks could impinge the growth trajectory.
The “catch up” in supply has been a challenge, however, as “post-COVID many industries were caught off guard and didn’t have the labor or ships or containers” to meet the demand, said Paul Norris, Conning’s Head of Structured Products. A key driver of the shortfall? Much of the production of container boxes is centered in Wuhan, China, which was completely shut down for an extended period during the pandemic and has not yet returned to its previous production levels.
The recent trade conflicts between the U.S. and China also led to the disruption of long-time supply chains, an issue exacerbated by the pandemic, Norris added. The disruptions have led to longer time delays in shipping, driving up those costs and eventually leading to higher prices for the end purchasers.
However, Norris believes “all of this will work itself out as workers return and supply chains are rebuilt” and that the current inflation is indeed transitory.
Conning (www.conning.com) ) is a leading investment management firm with more than $207 billion in global assets under management as of June 30, 2021.* With a long history of serving the insurance industry, Conning supports institutional investors, including insurers and pension plans, with investment solutions, risk modeling software, and industry research. Founded in 1912, Conning has investment centers in Asia, Europe and North America.
*As of June 30, 2021, represents the combined global assets under management for the affiliated firms under Conning Holdings Limited and Cathay Securities Investment Trust Co., Ltd. (“SITE”). SITE reports internally into Conning Asia Pacific Limited, but is a separate legal entity under Cathay Financial Holding Co., Ltd. which is the ultimate controlling parent of all Conning Holdings Limited controlled entities.
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