Subran: US labor data is soft, but inflation risks remain
According to a report cited by Jin10, Allianz chief economist Ludovic Subran said that recent US nonfarm payroll data was “actually weak,” but that softer employment figures do not materially change his broader inflation outlook. He said he still expects US inflation to peak above 3.7%, indicating that underlying price pressures may remain sticky even if labor-market momentum begins to cool. For macro-sensitive markets, this suggests that inflation, rather than payroll weakness alone, may continue to dominate expectations for monetary policy.
AI, fiscal stimulus, and energy are still supporting US growth
Subran argued that the US economy continues to show resilience because several important growth drivers remain in place. He specifically pointed to artificial intelligence, fiscal stimulus, and the energy industry as ongoing supports for economic expansion. In that context, he said the Federal Reserve may still be forced to tighten further if inflation does not retreat fast enough. His view is that the Fed could “have to” raise interest rates again in September. He described this as the point at which the real divergence between the US and Europe becomes visible: the US may still face a policy environment shaped by persistent inflation and relatively resilient growth, while Europe may be moving closer to a pause.
ECB may stay on hold after last month’s hike
On Europe, Subran said he does not expect the European Central Bank to take action again after its rate increase last month. He characterized that move as an “insurance hike” and said that, based on current data, it now appears to be behind them. In other words, the ECB may see less need for additional tightening in the near term than the Federal Reserve does. This directly reinforces his broader point that the transatlantic policy gap is widening.
War-related economic effects are still unfolding
Subran also commented on geopolitical risks, saying that the traumatic effects of the Iran war will take time to become fully visible in the data. He added that the economy is still bearing the cost of the conflict, though conditions are now “much better than a few weeks ago.” While he did not provide numerical estimates for the economic drag, his remarks indicate that geopolitical shocks remain part of the macro backdrop for both inflation and growth. Taken together, his comments portray a market environment in which central banks are responding not only to domestic data such as payrolls and inflation, but also to structural growth drivers and lingering external risks.