Perspectives Blog

Slow growth: Why is it here and will it stay?

February 24, 2014

There is no consensus on the root causes of slow growth. As economists seek explanations, the secular stagnation theory has re-emerged. Strong evidence suggests the neutral real rate has fallen. (But is it negative? We explore this question in this continuing series over the next few weeks.) By Marie Schofield, Chief Economist and Toby Nangle, Head of Multi Asset Allocation The idea that economies may be undergoing a long period of slow growth…

U.S. rates – Headwinds

Zach Pandl, Portfolio Manager and Strategist | March 17, 2014

At this week’s meeting, the Federal Open Market Committee looks likely to rework its forward guidance for short-term interest rates once again. We expect revised forward guidance to lean heavily on the idea of “headwinds”; this is a stand-in term for a low equilibrium real rate. We expect that the new guidance will make three main points: (1) that the FOMC is in no hurry to raise rates, (2) that rate hikes can proceed gradually once…

Is Japan’s economic rebound for real?

Daisuke Nomoto, Senior Portfolio Manager | May 23, 2013

Bold monetary easing in Japan has resulted in a shift in sentiment that the Japanese economy will finally come out of the long, dark tunnel. Our research suggests that there may be a modest boost to real income in coming months, which is expected to translate into increased consumer spending. We wouldn’t be surprised if the Japanese equity market takes a breather in the near-term, but this would create a good entry for people who have missed th…

Japan — All in with Abenomics

Fred Copper, Senior Portfolio Manager | June 6, 2013

…d net debt as a percent of GDP among the highest in the world, entrenched deflation, and a declining population, the decision to target inflation has mandated that all the chips be put on the table. Nominal economic growth is real growth plus inflation. Real growth will be hard to get. Real growth is a function of population growth and per capita productivity. We know the population is declining and a productivity adjustment of the required scale…

Capture five tax benefits with a 529 college savings plan

Columbia Management, Investment Team | March 21, 2014

By contributing to a 529 plan, you may benefit from tax advantages — without giving up control of plan assets. As an estate planning tool, 529 plans may allow removal of significant assets from your taxable estate. Investment growth in a 529 plan, as well as distributions, is not subject to the new 3.8% net investment income surtax. Owning a home. A financially secure retirement. A college education for a child or grandchild. These are a…

Saving for college — What’s the real cost of waiting?

Columbia Management, Investment Team | September 16, 2013

…ction. Also note that implementing a savings plan can provide relatives who would like to help – such as grandparents – with a way to do so more effectively. Consider working with a professional financial advisor to develop a realistic savings plan specific to your needs. Once you have a college savings strategy mapped out, don’t let it gather dust. A “Cost of Waiting” calculator can help you see just how much it could cost you for each year you…

Income inequality, disinflation and profit growth – the role of globalization

March 10, 2014

…wth seen at the overall economy level for EM has seen global inequality — measured at the household level — first plateau and then decline at the margin over the past 30 years (at admittedly extremely high levels). Exhibit 1: Real income growth at various percentiles of global household income distribution, 1988-2008 (in 2005 PPPs) Source: Lakner & Milanovic, 2013; World Bank Dataset Exhibit 1 shows how this has occurred. While the top 1% of…