hat to call this economic moment we are living through?
Stagflation is the word many reach for as inflation breaks records and growth goes into reverse, but that doesn’t quite capture it.
High unemployment usually accompanies stagflation. Instead, we are seeing the jobless rate fall lower and lower as vacancies outnumber those out of work for the first time ever. A shortage of workers seems to be what’s holding back growth, not tepid demand, even as prices rise. These are odd times.
Several things are going on at once. Government intervention during Covid kept the economy in a state of suspended animation from which it is now thawing. We are witnessing two years’ worth of hiring, investment, holidays, frivolous spending and insolvency crammed into a span of months.
The pandemic has also left economic scars, most clearly in the big rise in the number of inactive people. Long Covid and early retirement are chiefly to blame.
That would be enough for policymakers to deal with but we also face tsunami-like shockwaves from the war in Ukraine. Energy bills are skyrocketing and “apocalyptic” rises in food prices approach.
Finally, the long shadow of Brexit also looms. An exodus of EU workers, partly prompted by Covid, has created acute labor shortages in some industries. The Bank of England’s Andrew Bailey argued this week it was difficult to disentangle the Brexit effect, but it is there.
Surveying the sweep, I take inspiration from the cinema: chiefly the new indie sci-fi hit, Everything Everywhere All At Once. In it, Michelle Yeoh plays a tired-out laundrette owner forced to live out all her parallel lives at once after an interdimensional rupture in space and time.
It sounds exhausting because it is. We are living through the Everything Everywhere All At Once economy.
Credit: www.standard.co.uk /