Biggest threat to global economy in 2022? Inflation, not Omicron
BNN Bloomberg
News flash: COVID isn’t going to be public enemy No. 1 for the global economy in 2022. The biggest dangers this year will stem from inflation and the risk that policymakers will call the post-COVID recovery wrong.
News flash: The coronavirus isn’t going to be public enemy No. 1 for the global economy in 2022. The biggest dangers this year will stem from inflation and the risk that policymakers will call the post-COVID recovery wrong.
This is the year we’ll find out whether the global economy is robust enough to get by with less help from governments and central banks. And whether inflation is a temporary byproduct of COVID or a more persistent problem.
When confronted with a wide range of possibilities, forecasters usually settle somewhere in the middle. Among those Bloomberg surveyed, the consensus is that the world economy will expand 4.4 per cent in 2022, after the 5.8 per cent bounceback of 2021. From 2023 onward, most agree, growth will return to its long-term norm of around 3.5 per cent, as if COVID never happened.
There’s just one problem. From ground level, nothing about this economy looks normal; it’s completely out of whack. If that’s still true in 12 months, policymakers will almost certainly have messed up.
Take the labor market. There were at least 10 million job vacancies across the U.S. at the end of 2021, which every restaurant manager, plant foreman, and chief executive will tell you they’re struggling to fill. The labor shortage shows up everywhere—except in the statistics. Dig into the numbers, and you’ll find at least 5 million adult Americans not working today who were gainfully employed at the start of 2020.
The U.S. isn’t the only country with workers missing in action. The U.K. had more than a million unfilled jobs in November but at least 600,000 more people sitting on the sidelines of the job market than at the start of 2020. They are declining to take up work even as wages pick up.
