The anatomy of a growth scare

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The fate of the economic recovery seems to hinge on the answers to a number of big questions, one being whether the spread of the Delta variant of the coronavirus will derail the global recovery

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%. The500, America’s main stock index, fell by 1.6%, with smaller companies hit hardest.

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. Yet Britain, the first big, rich country to be hit hard by the Delta variant, is telling a different story. Our “economic-activity index” for the country, using Google data on visits to workplaces, transit stations and sites of retail and recreation, has dropped by about 5% since peaking in June .

 

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