My Climate Change News

SO MUCH IS unfamiliar about the pandemic that it has never been easy to make sense of what is going on. Yet in recent days uncertainty has gone into overdrive. Stockmarkets are volatile; uncertainty about the path of inflation and labour markets is high. The fate of the economic recovery seems to hinge on the answers to a number of big questions. Will the spread of the Delta variant of the coronavirus derail the global recovery? Will underlying weaknesses be revealed as governments unwind stimulus? How enthusiastic are households and firms about spending? But the answers are unclear. And four gauges of the recovery - market prices, “high-frequency” activity indicators, hard data and economists’ forecasts - are all giving mixed signals.

Start with markets. America’s Treasuries are a haven in uncertain times. In March investors sold them off as they took fright at rising inflation, pushing the ten-year Treasury yield up to 1.7%. But it has slowly slipped back since, as doubts about the continued strength of the economic recovery have taken hold. The growth scare seemed to intensify on July 19th, when the ten-year yield dipped to 1.19%. The S&P 500, America’s main stock index, fell by 1.6%, with smaller companies hit hardest. Commodity prices also took a knock. That of Brent crude oil fell by 7% to $69 a barrel. The dollar strengthened against other rich-world currencies.

All this seems consistent with concerns about the recovery and, in particular, a reassessment of what is known as the “reflation trade”, where investors buy assets most likely to benefit from an economic upswing. Yet by the next day the growth scare had seemingly blown over. Stockmarkets reversed their fall. The oil price and bond yields recovered a little.

High-frequency data present a similarly muddled picture. Global mobility measures are still edging up, according to a recent report by JPMorgan Chase, a bank, suggesting continued growth in GDP. Yet Britain, the first big,...