The global economy is currently teetering on the brink of recession after having delivered a strong post-pandemic recovery. Decades-high inflation caused by supply shortages and rising commodity prices – as well as an aggressive central bank policy response – is undoing the global expansion.
US consumers and investors have become increasingly pessimistic this year because of historically high inflation, the FOMC’s aggressive interest rate increases, and the war in Ukraine, among other things.
After a strong on the fourth quarter of 2021, economic activity has begun to slow more than expected early in 2022 due to rapidly accelerating inflation emanating from goods shortages due to supply chain bottlenecks, as well as a continued jump in inflation driven in part by surging commodity prices brought on by the Russia-Ukraine war.
The global economy continues to improve, with most regions now better off than six months ago. The Omicron variant of the virus introduces some uncertainty into the near-term outlook, but most analysts believe that it will not derail the overall momentum of the recovery
The global economy is moving forward in fits and starts, with varying results in different regions of the world. Covid-19 continues to be somewhat of a headwind for the economy, with the Delta variant raising concerns over a rise in new cases.
The global economy is forging ahead as it continues to recover from the very severe, but also very brief, recession triggered by the pandemic.