More Supply Chain Disruption and Pandemic Flare-Ups Key Risks to Economy in 2022: Poll
About one-quarter of 171 economists responding to a question about key risks to the global economic recovery said more supply chain disruptions or upticks in COVID-19 infections were the top risks.
Further supply chain disruption, COVID-19 flare-ups, and central bank missteps are the top risks to the world economy in 2022, according to a Reuters poll of over a hundred economists, with a significant number of them predicting inflation is likely to dent the recovery.
About one-quarter of 171 economists responding to a question about key risks to the global economic recovery said more supply chain disruptions or upticks in COVID-19 infections were the top risks. A similar proportion said central banks pulling back on stimulus too quickly was one of the chief downside risks to economic recovery.
Around two-thirds of economists, 117 of 182, who responded to an extra question, said the recent surge in global inflation was unlikely to persist over the next 2–3 years, though the remaining 65 said persistently higher inflation was likely.
Among those that expect higher inflation to stick around longer, over 60 percent said there was a high risk it pulls down global economic growth. At the same time, the polled economists raised their expectations for the rate of inflation in the vast majority of developed economies by between 0.1 and 0.7 percentage points.
"Supply chain disruptions and inflation are taking a toll on the economy and many consumers. And they may be sticking around for a while still," Bankrate senior economic analyst Mark Hamrick told The Epoch Times in an emailed statement.
The poll comes as supply chain disruptions have rattled markets and put consumers on edge, driving up producer costs and consumer prices. The surge in consumer inflation has put pressure on central banks to start dialing back loose monetary policies, though some policymakers fret that patches of weakness remain in the economic recovery, particularly in terms of labor markets.
"Many major central banks are now cautiously shuffling towards the exit when it comes to their ultra-loose monetary policies. They aren't doing this because of the strength of the economic recovery," said Jan Lambregts, head of global economics and markets research at Rabobank.
The total number of unemployed persons in the United States now stands at 7.7 million, and while that's considerably lower than the pandemic-era high, it remains elevated compared to the 5.7 million just prior to the outbreak. The unemployment rate, at 4.8 percent, also remains above pre-pandemic levels.
At the same time, other labor market indicators, such as the near record-high number of job openings and an all-time-high quits rate—which reflects worker confidence in being able to find a better job—suggest the labor market is gaining ground. Businesses continue to report hiring difficulties and have been boosting wages to attract and retain workers. Over the past six months, wages have averaged a gain of 0.5 percent per month, around twice the pace prior to the pandemic, the most recent jobs report showed.
"My feeling is we're going to see wage growth in excess of price inflation," Queen's College President and economist Mohamed El-Erian told CNBC in a recent interview, adding that he believes inflation is running "way beyond" what the transitory camp believes and it's becoming a growing problem for markets.
Besides measures of inflation running hot, consumer expectations for future levels of inflation have hit record highs, threatening a de-anchoring of expectations and raising the specter of the kind of wage-price spiral that bedeviled the economy in the 1970s. A recent Federal Reserve Bank of New York monthly Survey of Consumer Expectations showed that U.S. households anticipate inflation to be 5.3 percent next year and 4.2 percent in the next three years, the highest readings in the history of the series, which dates back to 2013.
By Tom Ozimek
Tom Ozimek has a broad background in journalism, deposit insurance, marketing and communications, and adult education. The best writing advice he's ever heard is from Roy Peter Clark: 'Hit your target' and 'leave the best for last.'
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