Where is economy going

But the other stimulus has already made some impact on the economy, and economists have already boosted the growth forecasts for this year and next. You don't fall off a cliff even though the money was already allocated," she said. Swonk noted there is some question about whether expanded unemployment benefits are keeping some workers from returning to work.

We do have a high reservation wage. There is a debate [about it ] that I don't think is unreasonable," she said. Swonk said the spread of variants of Covid is a risk to the economy, and it is specificially hitting individuals in the to year-old group, a key part of the workforce.

Another risk to the recovery could be the potential for a tightening of Fed policy , which for now looks unlikely to change. But as the economy booms, the Fed could worry about overheating and inflation. The producer price index sent a worrisome sign Friday. Fed Chairman Jerome Powell has gone out of his way to stress that the central bank will keep policy low, and that he expects a transient jump in inflation in the spring.

The personal consumption expenditures price index, watched by the Fed, was up 1. Powell has said higher inflation should show up this spring because of the base effect, compared with last year's weak numbers.

He said inflation should be transitory, and bottlenecks in supplies should be temporary. Powell, in comments at an IMF forum Thursday, reiterated that inflation has been low for 25 years, and that trend should continue.

He also said the Fed could use its tools, meaning raise interest rates if inflation does look threatening. The booming economy could also bring in some amount of wage inflation, in addition to pressures on the price of goods and services. Employment data does not currently show much in the way of worrying gains, but hiring is expected to surge and job creation could top 1 million for each of the next several months, according to economists' projections.

What you're seeing is companies are paying more. The outlook for the next year is at best uncertain; countries are rushing to produce and distribute vaccines at breakneck speeds, some opting to bypass critical phase trials.

Meanwhile, unemployment numbers remain dizzyingly high, even as the U. Today the U. Most governments today accept a deep economic interdependence among nations created by decades of trade and investment globalization.

But those expecting a so-called V-shaped economic recovery, a scenario in which vaccinemakers conquer COVID and everybody goes straight back to work, or even a smooth and steady longer-term bounce-back like the one that followed the global financial crisis a decade ago, are going to be disappointed. There is no commonly accepted definition of the term. But there are three factors that separate a true economic depression from a mere recession.

First, the impact is global. Third, its bad effects will linger longer. A depression is not a period of uninterrupted economic contraction. There can be periods of temporary progress within it that create the appearance of recovery. The Great Depression of the s began with the stock-market crash of October and continued into the early s, when World War II created the basis for new growth.

That period included two separate economic drops: first from to , and then again from May into They change the way we live. The Great Recession created very little lasting change. Some elected leaders around the world now speak more often about wealth inequality, but few have done much to address it.

They were rewarded with a period of solid, long-lasting recovery. In addition, political dysfunction—in the U. As the financial crisis took hold, there was no debate among Democrats and Republicans about whether the emergency was real.

In , there is little consensus on what to do and how to do it. Return to our definition of an economic depression. First, the current slowdown is without doubt global.

Most postwar U. But most were the result of domestic inflation or a tightening of national credit markets. Those issues will be exacerbated by dwindling policy support as well as an ongoing battle against Covid and its variants, though few economists expect widespread lockdowns and the plunge in activity that happened in early to mid An aggressive spurt of inflation brought on by supply constraints and huge demand related to the economic reopening will hit output.

While many economists, including those at the Federal Reserve, are willing to write off the inflation as temporary with soaring used auto and truck prices contributing a large component, officials including Treasury Secretary Janet Yellen warned that the price increases are likely to continue for at least several months.

Cases of the delta variant are spiking in a handful of states , and health officials worry that the U. Few if any economists expect another wave of lockdowns or similar constraints in the U.

Brusuelas added that the negotiations over the debt ceiling also could shake up things in the U. Yellen said Friday that extraordinary measures the U. Sign up to start a free trial today. Skip Navigation.