New York: Inflation will climb higher if the US economy doesn’t reindustrialize its economy, according to investment manager Richard Bernstein.
Bernstein, who founded Richard Bernstein Advisors LLC (RBA) in 2009, pointed to the US’s “massive” trade deficit, with the difference between imports and exports clocking in at $773.4 billion last year, according to the Commerce Department.
That trade imbalance could lead to trouble for the economy, considering the ongoing trend of deglobalization. World trade has become more fragmented since the pandemic, and rising geopolitical tensions are a sign that the trend is continuing, he told CNBC.
That suggests the US needs to reindustrialize its economy or face higher prices as a long-term consequence, he warned.
“It has to happen. If it doesn’t … we’re going to have tremendous inflation here in the United States,” Bernstein said to CNBC on Monday.
“We’re dependent on the world for everything at a time when globalization is starting to contract. Not a good combination. It changes the story from secular disinflation to secular inflation.”
Reindustrialization efforts in the US are already underway, with the government offering billions in aid for companies to build new infrastructure and produce key goods, like semiconductors, EVs, and solar panels. More firms are already choosing to manufacture their goods in America, a JPMorgan paper found.
Bernstein has been calling for a reindustrialization of the US economy over the past decade.
