Global economics in The Monday Briefing
Whatever happened to the antiques market
There may still be a few readers of the Monday Briefing who were early adopters, back in 2008. If so they may recall my enthusiasm for antique furniture as, “a functional, proven asset at a low price”. Prices may have looked low then, but in the ensuing 13 years they have, by and large, fallen still further. In a world where the value of equities, bonds, commodities and houses have soared the value of antique furniture has slumped. This week’s briefing looks at what’s behind this decline.
The rise and rise of house prices
Economic shocks tend to hold back house prices. But one of this pandemic’s peculiarities has been how it has supported housing markets. Despite bringing about the sharpest downturn in almost a century, the pandemic has fuelled a housing boom in the developed world.
Summer quiz
Our summer quiz offers an eclectic test of knowledge, of pandemic-related developments, many in economics and business. The answers and a brief explanation of the factors at work are at the end of the quiz.
Summer reading list
You may not have been able to get to your preferred holiday haunt this year, but we hope that our summer reading list will offer a distraction wherever you spend your summer break. The eight articles are available free online, although some websites restrict the number of articles that can be accessed without charge each month.
Summer economic outlook
So far 2021 has been a year of improving global economic prospects, particularly in advanced economies. The rollout of vaccines and an easing of restrictions across the West have underpinned a strong recovery in activity – albeit one marked, increasingly, by surging cases of the Delta variant.
Growth first
Deloitte’s latest survey of UK chief financial officers, released overnight, shines light on the plans of Britain’s largest corporates as the economy reopens. The full report is available at: https://www2.deloitte.com/uk/en/pages/finance/articles/deloitte-cfo-survey.html
Stock market boom continues
The S&P 500 closed on Friday at a new all-time high. Since last year’s pandemic-induced crash, the index has almost doubled in value, reflecting a surprising feature of the COVID-hit global economy – buoyant equities. Indeed, stocks have rallied since last March, when the global economy was on the verge of the deepest downturn in more than a century. So far, investors have shrugged off a deadlier second wave, further lockdowns, the more transmissible Alpha and Delta variants and, most recently, concerns over rising inflation.
Assessing COVID risks
The pandemic has been the main determinant of UK activity in the last 15 months. Rising case rates last spring and autumn, and then at the start of this year, triggered lockdowns that shrank the economy. But that link between case rates and growth has softened. The recent rise in cases and hospitalisations, driven by the Delta variant, have not dented economic optimism. On the contrary, economists have been raising their UK growth forecasts and the regular economic data have been coming in on the strong side of expectations.
The looming capex boom
Throughout history economies have been shaped by shocks, from recessions to technological shifts and energy transitions. The Great Depression helped change thinking about the role of government, paving the way for a permanent expansion in the state. The switch from steam power to electricity triggered a vast reorganisation of manufacturing.
Commodity supercycle or normal cycle?
Commodity prices have boomed over the last year, boosted by low interest rates and a snap back in global demand. The Goldman Sachs commodity index has risen by 55% from its low and the rally has been broad-based, lifting metals, oil and agricultural commodities.