Global Economic Research16 February 2024J P M O R G A Nwww.jpmorganmarkets.comContentsGlobal house prices: Turning a corner after the correction10Climate change: Bad and could be worse14US: The remarkable growth of the disabled workforce16Israel: Shun no labor18RBA policy now looking Taylor-made21 Global Economic Outlook Summary4Global Central Bank Watch6Nowcast of global growth7Selected recent research from J.P. Morgan Economics9 Data Watches United States24 Focus: January inflation changes aren�t always one-offs30Euro area31Japan36Canada39Mexico41Brazil43Argentina44Andeans46United Kingdom48Emerging Europe52South Africa58Australia and New Zealand60China, Hong Kong, and Taiwan62Korea64ASEAN66India70Asia focus72 Regional Data Calendars53Economic and Policy ResearchBruce Kasman(1-212) 834-5515bruce.c.kasman@jpmorgan.comJoseph Lupton(1-212) 834-5735joseph.p.lupton@jpmorgan.comMichael S Hanson(1-212) 622-8603michael.s.hanson@jpmchase.comJPMorgan Chase Bank NAGlobal Data Watch•US inflation rebounds, with broad firming in goods and services •With US spending cooling, dormant European consumption needs to lift • BoJ faces dilemma of yen and domestic demand weakness•Next week: Modest rise in Feb DM flash PMI; meeting CBs on holdThe trend is not always your friendForecasts have run aground during this expansion when previous business cycle regularities have been applied to an unprecedented post-pandemic environment. Extrapolating a weakening in global goods sector activity in the face of aggressive monetary tightening fueled recession fears as we turned into 2023. While reliably signaling forthcoming weakness in the past, an unusual element of the recent goods sector slide was a normalization of demand components (namely tech and inventories) that were elevated in the early stages of the pandemic recovery. Meanwhile, the transmission of the monetary policy drag to the broader economy was being blunted by unusually positive cyclical momentum building in the services sector. In a similar fashion, market participants have seized on inflation�s inertial properties in extrapolating an impressive 2H23 slide. The downshift in core inflation was narrowly concentrated in goods prices, however, where the removal of bottlenecks, falling commodity prices, and weak goods demand generated a synchronized global slide in core goods CPI growth (Figure 1). For some months, this global disinflationary impulse has been fading as goods demand has picked up and input costs have firmed. Forecasting the trajectory for service price inflation is more difficult and subject to idiosyncratic developments. Nevertheless, strong growth in service sector activity, tight labor markets, and elevated labor costs gains argue against a follow-through of last year�s goods price slide to service sector disinflation in 1H24. This assessment underlies our view that global and US core CPI disinflation will stall in 1H24, with the pa...
