Relentless pandemic casts shadow over global economy

More than two years after the COVID-19 pandemic, uncertainty about how the health crisis will evolve continues to hamper US companies

“While we’re not sure how many people will work from offices, it will be difficult for restaurant owners who serve people in the offices to know how many people they should hire or how much they should place the order. Place,” said Peter Goodman. New York Times global economics correspondent on CBS News. “So there are all kinds of uncertainties within the economy.”

For example, in the early days of the pandemic, people crouched down and exchanged gym memberships for workouts at home. But the long-term impact on consumer behavior is difficult to predict, and poses a challenge for businesses.

“People have spent a lot of money putting exercise equipment in their basement gyms while they’ve been confined,” Goodman said. “How many of these people are back to the gyms? What does that mean if you have a gym? “

An increase in demand for a number of goods while Americans were quarantined at home occurred when supply chains broke down. The system has yet to fully recover.

“We have overflowed the global supply chain; we are still facing the aftershocks of that. This is a major source of the inflation we are dealing with,” Goodman said.

Rising consumer demand, along with broken supply chains, is also behind the rise in inflation that is currently hitting Americans and others around the world. Central banks around the world are moving to raise interest rates in an effort to control inflation, which is holding back economic growth.

When borrowing costs go up, “you’re less likely to order, you’re less likely to spend, than you hire,” Goodman said. “This cools economic activity and prices go down.”

But deliberately slowing a country’s economic growth also reduces job opportunities and reduces markets where companies can sell their goods, he added. “Raise rates when you’re worried about inflation; lower rates when you’re worried about a lack of jobs, insufficient growth.”

There are also additional variables at play that deepen fears of a recession. The persistence of Russia’s war against Ukraine it is increasing the cost of energy worldwide.

“The Fed has no leverage to get Vladimir Putin out of Ukraine,” Goodman said.