American investor Cathie Wood believes that mass movement of workers from expensive cities to cheaper ones will help push inflation down. The Founder and CEO of Ark Invest, an investment management firm, said she is more afraid of deflation than inflation.

Share Market Live

NSE

Ark Invest is moving its headquarters from New York, the world’s largest financial centre and one of the most expensive cities to live in, to little-known St Petersburg, Florida.

Compared to St Petersburg and other smaller towns, New York City is nearly 70 percent more expensive. As a result, entrepreneurs and business owners are beginning to pack bags and move to cheaper cities. As a result of the mass movement, the demand pressure on goods and commodities is expected to ease, thus reducing inflationary pressure.

Also read:

Deflation a bigger risk than inflation, Fed may ease again: Macquarie’s Shvets

“The cost of living (in St Petersburg) is anywhere from 20-40 percent less than in New York City and that includes the rents,” Wood said in a company webinar.

“The exodus or the great migration is from the very high-rent areas of the world to much lower rents. So there’s going to be a mix effect that many are not taking into account as they’re thinking about inflation,” she added.

St Petersburg, along with many other smaller cities in the US, is beginning to court entrepreneurs and innovative businesses instead of large corporations to boost the economy.

“We believe that St Pete wants to become the next Austin and attract tech companies, attract innovation,” Wood said.

“We’re seeing all levels of the government work together on this very cohesively, which is very refreshing. They are very excited that Ark is here to help with that process," Wood explained.

While experts, analysts, and investors are exercising caution due to fears of inflation in coming economic cycles, Wood has been a staunch advocate of deflation instead. Wood expects to see deflation as a result of commodity prices crashing, lack of reform on tax policies and new innovation trends.

(Edited by : Shoma Bhattacharjee)

First Published:Oct 13, 2021 6:00 PM IST