In the 2010s, five years of anaemic nominal growth, followed by five years of stronger nominal growth in the United States and in the euro zone

- "The first five (roughly) years of the 2010s should be characterised, from our viewpoint, in the United States and in the euro zone:• by further household and corporate deleveraging, due to the adjustment of debt ratios to the lower level of wealth resulting from the crisis;• by the distortion of income sharing to the detriment of employees owing to companies’ determination not to depend on external financing to carry out their investments;• by persistently quite low commodity prices, because of the contraction in global demand for commodities stemming from the crisis."
- "One will therefore likely have in the first half of the decade, both muted real growth and low inflation and, by consequence, very weak nominal growth. When deleveraging is deemed sufficient, and income sharing levels off, real growth will accelerate. At the same time, strains will appear in commodity markets owing to robust growth in demand for commodities in emerging countries, and this will generate additional inflation. Nominal growth should therefore be more robust from 2015 onwards."
- "Investors with a long-term horizon thus have to factor in this highly probable trend break in both real growth and inflation in the middle of the 2010s. If nominal interest rates move in line with nominal growth, this trend break will normally be neutral for equities, but obviously unfavourable for bonds. In reality, due to nominal short-sightedness, it will also be negative for equities. If real growth increases at the same time as inflation, real estate (both residential and commercial) is a good protection against this trend break."

Natixis Flash Economics 466 20100916