17 January 2022
"Economists who adhere to rational-expectations models of the world will never admit it, but a lot of what happens in markets is driven by pure stupidity - or, rather, inattention, misinformation about fundamentals, and an exaggerated focus on currently circulating stories." ― Robert Shiller
Welcome to the Economic Surplus, the newsletter brought to you by the Marshall Society! We are the University of Cambridge's flagship economics society. Every week, we bring you our bespoke commentary on economic trends, updates on our exclusive members' events as well as a summary of the headlines you can't ignore! You've probably received this email because you were previously subscribed to the Marshall Society's old email list, but if you have been forwarded this by a friend, feel free to subscribe here!
Teneo Management Consulting events
Teneo Consulting UK is excited to invite you to several upcoming events, all designed to help you through the consulting application process
Our Management Consulting division focuses on answering key strategic questions for business and public-sector leaders through our mix of detailed research and analysis, combined with the unique expertise that exists across Teneo's senior team. We operate across a diverse array of sectors including Consumer Goods, Healthcare, Leisure & Hospitality, Software, Transport, and TMT, amongst others. Within these markets, we provide strategic, operational, and due diligence support, advising reputable FTSE 100 and Fortune 500 firms, key public-sector organisations, and leading private equity houses.
Teneo case study skills session
Date: 7th February 2022
Time: 12:30 - 2:00pm BST
Venue: Online, register here
Case Study Interviews lie at the heart of the recruitment processes for most management consulting firms. Everyone can learn how to 'ace the case' but it is essential to commit to making time and space to practice in order to build confidence and fluency as well understanding the variety of case studies you are likely to face. This workshop requires no prior knowledge or experience and will help you with both information and the chance to get more hands on with one or more case studies in a supported environment.
We expect this workshop to be led by consultants currently working in the sector, who will:
• lay out the overall structure of case studies - including the sort of cases that applicants may find most challenging;
• provide worked examples and advice on core techniques that can be used for different types of cases; and
• offer advice on the most effective ways to practise, and how to manage your performance and anxiety in the case interview.
You are welcome to join this session just to listen and to think about how you might address the questions posed , although we encourage active participation as the best way to get the most from the workshop environment.
How to successfully apply for a job in Management Consulting
Date: 1st February 2022
Time: 6:00pm – 7:30pm BST
Venue: Online, register here
Management Consulting is a competitive field to enter, and the application process can appear complex and overwhelming. This event will provide guidance on what recruiters are looking for throughout the application process, from CVs and cover letters to interviews. It will be led by a team of Teneo Managing Directors, Managers, and Consultants, all of whom are involved in interviewing candidates.
Case Study Interviews are central to the recruitment processes for management consulting. While they are a learnable skill, it takes time and practice in order to build the confidence and fluency you will need to succeed at interview. Therefore, in this session we will:
Explain the types of case studies you may face
Discuss what recruiters are looking for from each one
Step through a worked example, including tips on how to manage your nerves and what to do if you get stuck
There will be time at the end to ask questions to our panel. Please submit these during sign up, or via the 'chat' function during the event.
Teneo UK – Women in Consulting Virtual Presentation
Date: 25th January 2022
Time: 3:00pm – 4:30pm BST
Venue: Online, register here
As part of our current Internship recruitment round, Teneo Consulting UK is excited to announce that we will be holding a Women in Consulting virtual presentation and Q&A evening. Teneo is a global CEO advisory firm and our Management Consulting division focuses on answering key strategic questions for FTSE 100 and Fortune 500 firms, key public-sector organisations, and leading private equity houses. This event is open to any attendees who identify as women and are interested in a strategy consulting career. The event will include a 45-minute presentation from our team about strategy consulting and Teneo's proposition, followed by an informal Q&A and discussion session. Attendees will also have the chance to learn about our Associate Consultant Summer Internship role and interview process, and virtually meet with some women from the Teneo Consulting UK team.
We are also currently recruiting for our Associate Consultant Summer Internship positions. Apply now!
This week’s Marshall’s Thoughts are written by Alvaro Martin.
At the end of December, the US registered a year-on-year inflation rate of 7%, the highest rate in more than 40 years. This rate prompted a big debate among economists about what should we expect the inflationary trend to be and, specially, if there were aby available signs that indicated that inflation could be slowing down. Many pointed out that a 7% year-on-year rate wasn’t so bad if we analyzed the inflationary trend and just that isolated number.
Many economists have claimed that expectations remained anchored in the US, even in December. American analysts did a good job with their predictions for inflation, as the 7% didn’t deviate too much from the consensus estimated. An important fact that has been presented by many as a sign of inflation slowing down is that it has just increased by 0.2 percentage points since November, when year-on-year registered inflation in the US was 6.8%, whilst in October and November it increased by more than 1 and 0.5 percentage points respectively, in contrast with the previous month. This seems to show that the acceleration of inflation can be expected to come to an end, which is partially corroborated by the fact that month-on-month inflation fell to 0.5% in December, from a top 1% in October, registering even a month-on-month deflation in energy prices in the last month of 2021.
On top of it, another important factor that helps to think that inflation expectations are still anchored in the US and that the overall trend may be slowing down is the evolution of wages. For the moment, wages are not growing above inflation, preventing the creation of a wage-price spiral and a general overheating of the whole American economy.
However, this is not the whole story, as there are also some aspects of the American economy and the evolution of prices that lead to think that high inflation rates may not be slowing down nor coming to an end in the US.
Firstly, even though month-on-month inflation slowed down to 0.5% in December, coming from higher rates in October and November is not good at all, as a month-on-month rate of 0.5% over a year will mean a year-on-year average inflation of 5.6%. Furthermore, even though year-on-year inflation is following estimations and expectations, core inflation in the US has risen from 4.9% to 5.5% in just one month, which means that inflation could rapidly spread to salaries and heavily affect many intermediate and consumption goods across the economy in a larger way than expected. Core inflation also increased when measured month-on-month, from 0.5% up to 0.6%, worsening the trend, and being above estimations.
For the moment, nominal wages are increasing below inflation, which means that real wages are falling, and consumers are losing purchasing power, which could lead to a reduction of consumption in the near future and a possible contention of inflation. However, up to November, wages were increasing at a 4.3% year-on-year rate, which is still a risk for the lengthening of high inflation.
Finally, we should also bear in mind that productive and logistic bottlenecks probably won’t be solved in the near future due to the evolution of global value chains and the delay in the delivery of many essential intermediate goods, which could worsen inflationary trends.
In conclusion, even though we can find some signs of a mild moderation of the acceleration of inflation trends, there are still many other factors that point in the opposite direction, showing that inflation will probably still keep on rising over the next few months due to the evolution of wages and ongoing production and supply bottlenecks.
In Case You Missed It:
The Inflation Outlook Answered in Two Simple Questions | Fullstack Economics. Here, Alan Cole describes how we should analyze inflation from a double perspective: factors effecting supply and factors affecting demand, and goes on to study global factors that could be affecting inflation trends and their evolution in the present.
Is the Rightward Shift in French Politics Macron's Fault? | Le Monde. In this article, Thomas Piketty describes some of the main economic and social policies put forward by Emmanuel Macron’s government over the last few years and how this has been a crucial factor in shifting French politics to the right. Later on, Piketty proposes a political alternative for the left based on social-federalism.
Revising the European Fiscal Framework | Vox. In this article a group of academics describes how over the last decade a consensus has been built around the idea that the deficit and debt conditions and limits established in the Stability and Growth Pact have now been outdated. The authors present a proposal to update the European fiscal framework by revising the fiscal rules and creating a European Debt Agency to absorb the debt generated and accumulated during the pandemic.
That's it from us for now!
The Marshall Society