Delivering Global Macro Investment Insights

DeSaque Macro Research

DeSaque Macro Research Limited was formed by Said DeSaque in April 2012 with the view to delivering global macro investment insights aimed at providing new ideas to clients.

Said DeSaque has over 26 years of experience working as a professional economist in financial services. Prior to establishing DeSaque Macro Research, Said held positions as Senior Economist at Robert W Baird and William Blair. He began his career as a graduate at PaineWebber in 1986, where he eventually became Head of the London Economics Department.

Said takes a very keen interest in international relations, along with their implications for economic development. His research interests include the economic transformation of China and its implications for global capital markets, particularly in the United States. He is a member of Chatham House in London.

The US economy and capital markets have historically been Said’s main focus of attention. He frequently presents his views to institutional investors in diverse geographic locations. In recent years, Said has also been carefully monitoring economic developments in Asia, particularly China and Japan.

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Global Economist, DeSaque Macro Research

Said Desaque

Global Economist

Macroeconomics

US real GDP could surpass its previous cyclical peak in Q1, thereby casting serious doubts about the necessity for additional fiscal stimulus as proposed by the Biden Administration. Bond investors are concerned about the inflationary implications of further fiscal and monetary easing from the perspective of excessive aggregate demand, but little analysis has hitherto been performed about the supply-side implications.
As COVID-19 vaccine rollouts eliminate the need for lockdowns, supply-demand imbalances will emerge as companies wait to ensure no risks of relapse before bringing mothballed capacity back on stream. Delivery delays have risen over the past year due to labour-safety measures and transportation constraints, but these should improve with vaccine rollouts, thereby reducing supply shortfalls.
The timing of the proposed $1.9 trillion fiscal stimulus would not have been approved by John Maynard Keynes, the original proponent of running budget deficits to support demand. The stimulus is massively front-end loaded for political purposes and does nothing to enhance the supply-side of the US economy.
Increasing the federal minimum wage to $15 per hour by 2025 will raise the cost of low-pay workers and could encourage firms to invest in labour-saving technology. Higher minimum wages will boost demand in the short-term due to the higher marginal propensity to consume of low-pay workers, but the potential substitution of labour for capital by firms will eventually provide an offset.
In contrast to the previous recovery, there has been a strong and rapid rebound in the level of job openings in the economy as those sectors that were initially badly impacted by COVID-19 recover. Meanwhile, opponents of continued extended unemployment insurance argue that high levels of unfilled job openings are consistent with unemployed workers having little financial incentive to look for work, thereby justifying a reduction in benefits. The civilian labour force participation rate has fallen over the past year, and the risks of significant wage inflation will increase if the Fed allows the economy to let rip and there is no offsetting increase in labour supply.

US real GDP could surpass its previous cyclical peak in Q1, thereby casting serious doubts about the necessity for additional fiscal stimulus as proposed by the Biden Administration. Bond investors are concerned about the inflationary implications of further fiscal and monetary easing from the perspective of excessive aggregate demand, but little analysis has hitherto been performed about the supply-side implications.
As COVID-19 vaccine rollouts eliminate the need for lockdowns, supply-demand imbalances will emerge as companies wait to ensure no risks of relapse before bringing mothballed capacity back on stream. Delivery delays have risen over the past year due to labour-safety measures and transportation constraints, but these should improve with vaccine rollouts, thereby reducing supply shortfalls.
The timing of the proposed $1.9 trillion fiscal stimulus would not have been approved by John Maynard Keynes, the original proponent of running budget deficits to support demand. The stimulus is massively front-end loaded for political purposes and does nothing to enhance the supply-side of the US economy.
Increasing the federal minimum wage to $15 per hour by 2025 will raise the cost of low-pay workers and could encourage firms to invest in labour-saving technology. Higher minimum wages will boost demand in the short-term due to the higher marginal propensity to consume of low-pay workers, but the potential substitution of labour for capital by firms will eventually provide an offset.
In contrast to the previous recovery, there has been a strong and rapid rebound in the level of job openings in the economy as those sectors that were initially badly impacted by COVID-19 recover. Meanwhile, opponents of continued extended unemployment insurance argue that high levels of unfilled job openings are consistent with unemployed workers having little financial incentive to look for work, thereby justifying a reduction in benefits. The civilian labour force participation rate has fallen over the past year, and the risks of significant wage inflation will increase if the Fed allows the economy to let rip and there is no offsetting increase in labour supply.    

Misguided US Stimulus Offers Little Help to Supply-Side to Offset Potential Inflation Risks