Hopes for a quick and strong recovery have dimmed over the last few months of supply-chain disruptions, inflation, labor shortages, and Covid. The Wall Street Journal’s Economic Forecasting Survey shows leading economists see a longer recovery trend.
The WSJ reports,
Uncomfortably high inflation will grip the U.S. economy well into 2022, as constrained supply chains keep upward pressure on prices and, increasingly, curb output, according to economists surveyed this month by The Wall Street Journal.
The economists’ inflation projections are up dramatically from July, while short-term growth outlooks are lower.
Economists on average see inflation at 5.25% in December, just slightly less than the rate that has prevailed since June. Assuming a similar level in October and November, that would mark the longest inflation has been above 5% since early 1991.
“It’s a perfect storm: supply-chain bottlenecks, tight labor markets, ultra-easy monetary and fiscal policies,” said Michael Moran, chief economist at Daiwa Capital Markets America.
Covid is now taking a back seat to the supply chain and labor shortages.
Concerns about limited supply are the main cloud over the outlook. Around half of respondents cited supply-chain bottlenecks as the biggest threat to growth in the next 12 to 18 months, while nearly one-fifth pointed to labor shortages. They also expect supply-chain woes to weigh on the economy through much of next year. Some 45% estimate that it will take until the second half of 2022 for bottlenecks to have mostly receded, compared with two-fifths expecting major improvement before then.
Read the whole story. We’re going to be in this for a while.