20180621-NATIXIS-The_crucial_issue_now_is_how_to_boost_productivity_6页_674kb

Flash Economics Summary

Core Content

This document discusses the relationship between productivity gains, unemployment rates, and potential growth in the United States and the euro zone. It emphasizes the importance of productivity in determining long-term economic growth and highlights the current state of investment, innovation, and modernization of capital in these regions.

Main Points

1. Productivity Gains and Potential Growth

• The unemployment rate is approaching the structural unemployment rate in both the United States and the euro zone, suggesting that growth is returning to the level of potential growth.
• However, potential growth is currently low, calculated as the sum of the five-year trend in productivity gains and labour force growth.
  • United States: 1.7% per year
  • Euro zone: 1.4% per year

2. Financial Market and Institutional Expectations

• Financial markets, international institutions, and governments currently expect higher growth than the potential growth calculated above.
• For these expectations to be valid, productivity gains must increase significantly.

3. Investment and Innovation Levels

• Investment, innovation, and modernisation of capital are significantly higher in the United States than in the euro zone.
• This suggests that the United States may see a slight upturn in productivity gains, while the euro zone is unlikely to experience such an upturn.

4. Productivity Trends and Cyclical Fluctuations

• Productivity gains must be corrected for cyclical fluctuations to reflect the actual trend.
• In the United States, productivity gains corrected for the cycle are close to actual gains, indicating positive momentum.
• In the euro zone, productivity gains corrected for the cycle are markedly lower than actual gains, suggesting weakness in underlying productivity trends.

5. Conclusion on Productivity Outlook

• Based on current data, it is reasonable to conclude that:
  • Productivity gains can pick up slightly in the United States.
  • Productivity gains are unlikely to increase in the euro zone.

Key Information

• Charts 1A and 1B show that the unemployment rate is near the structural rate in both regions.
• Charts 2A, 2B, 3, and 4 illustrate the low potential growth due to low productivity and labour force growth.
• Charts 5A, 5B, 5C, and 5D highlight the higher investment and innovation levels in the United States.
• Charts 6A and 6B demonstrate the impact of cyclical fluctuations on productivity.
• Charts 7A and 7B show that productivity gains in the United States are close to actual trends, while in the euro zone, they are lower.

Disclaimer and Legal Information

• This document is intended for professional and qualified investors only and is strictly confidential.
• Natixis is regulated by various authorities including the European Central Bank (ECB), the ACPR in France, the Financial Conduct Authority (FCA) in the UK, and the Dubai Financial Services Authority (DFSA).
• The views expressed in the report reflect the personal opinions of the authors and not necessarily those of Natixis or its affiliates.
• No liability is accepted for the accuracy, completeness, or relevance of the information.
• Investment decisions should be made with careful consideration of individual circumstances and regulatory requirements.

Table 1: GDP Growth Forecasts

• The forecasts are higher than potential growth, which implies a need for significant productivity improvements.

Final Note

• The document does not constitute a personalized investment recommendation.
• No financial analysis is conducted in accordance with legal requirements to promote the independence of investment research.
• No liability is accepted for any loss or damage arising from reliance on the information provided.