September 16, 2021

US economy is being undermined by supply-side struggles

The US isn’t a simple machine where government spending is the input and easily predictable economic growth is the output. If Washington policymakers doubted that reality, its truth is becoming all too clear during this pandemic. You can try to boost growth by increasing demand, but there’s also a supply side of the economy. And even if the former is holding up well during this Delta surge, it’s strength can be at least partially offset by troubles with the former. This from Capital Economics:

With authorities having shown no appetite to reimpose restrictions on activity and new virus cases now levelling off . . . [and] assuming new virus cases drop back over the coming weeks, this all suggests that the hit to demand from the Delta variant will be more modest than in previous waves. . . . [P]otentially more…

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