The Economist Magazine 16th July 2021. The pandemic caused a fearsome economic slump, but now a weird, exhilarating boom is in full swing . The oil price has soared, while restaurants and haulage firms are having to fight and flatter to recruit staff. As listed firms signal that profits will hit an all time high this year, stock markets are on a tear. An index produced by JP Morgan Chase and Markit suggests that
global growth is at its highest since the exuberant days of 2006. Any escape from covid19 is a cause for celebration. But today’s booming economy is also a source of anxiety , because three fault lines lie beneath the surface. Together, they will determine who prospers, and whether the most unusual recovery in living memory can be sustained.
The first fault line divides the jabs from the jab nots. Only those countries getting vaccinations into arms will be able to tame covid19. That is the condition for shops, bars and offices to reopen permanently, and customers and workers to have the confidence to leave their homes . But only one in four people around the world has had a first dose of vaccine and only one in eight is fully protected. Even in America some under vaccinated states are vulnerable to the infectious Delta variant of the virus. The second fault line runs between supply and demand.
Shortages of microchips ha ve disrupted the manufacture of electronics and cars just when consumers w ant to binge on them. The cost of shipping goods from China to ports on America’ s west coast has quadrupled from its pre pandemic level. Even as these bottlenecks are unblocked, newly open economies will create fresh imbalances (see Briefing). The Economist Magazine 16th July 2021
In some countries people seem keener to go for a drink than they do to work behind the bar , causing a structural labour shortage in the service sector. House prices have surged, suggesting that rents will soon start to rise, too. That could sustain inflation and deepen the sense that housing is unaffordable.
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