U.S. Financial System is More "Damp Firewood" than "Dry Tinder" says BNY Mellon's Hoey;
"Subcycle Inflation Peak" Expected in Many Countries Later This Year
LONDON & NEW YORK, May 16, 2011 – “We believe that the U.S. currently has more of a ‘damp firewood’ financial system than a ‘dry tinder’ financial system, which implies only gradual strengthening of credit-financed spending,” says BNY Mellon Chief Economist Richard B. Hoey in his May 2011 Economic Update.
“While global inflation pressures are rising, this is occurring after a period of disinflation and we expect a ‘subcycle inflation peak’ later this year in many countries,” Hoey continued. Important subcycle fluctuations Hoey expects include:
• A V-shaped pattern in the Japanese economy;
• A drop and then a rebound in auto production;
• A moderate subcycle cooling in the industrial sector in the next few months, and
• An inflation surge with many countries likely to reach a “subcycle inflation peak” later this year.
Hoey expects cyclical expansion to be sustainable even as many economies experience a short subcycle slowdown in the industrial sector following the recent phase of an unsustainably rapid surge in industrial production at a time of higher energy prices and some policy tightening.
See http://www.bnymellon.com/foresight/pdf/update.pdf for Hoey’s complete May 2011 Economic Update.
Notes to Editors:
BNY Mellon Asset Management is the umbrella organization for BNY Mellon’s affiliated investment management firms and global distribution companies.
BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering superior investment management and investment services through a worldwide client-focused team. It has $25.5 trillion in assets under custody and administration and $1.2 trillion in assets under management, services $11.9 trillion in outstanding debt and processes global payments averaging $1.7 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. Additional information is available at www.bnymellon.com.