The Global Economy in Turbulent Times

CHAPTER 28 Muddling Through the Inflation¹

In Chapter 11, I wrote: “Just as economic expansion is stabilizing in the long-troubled United States and the eurozone, concerns are now emerging on the economic health of Asia and the Middle East. The unfolding disaster in Japan . . ., along with the continuing turmoil in the Middle East, have raised new concerns and uncertainties over economic prospects in these regions, including their impact on food and commodity prices, especially oil.”² As the world turns, what has not changed is the underlying inflation, which continues to threaten global stability, albeit with different tempos between the West and the East.

Indeed, recent developments have only exacerbated the price trends. US jobs recovery gained speed in March 2011. Many herald this as recovery taking root. Half a million Americans have found jobs since early 2011. Unemployment fell to a two-year low of 8.8 percent, from 10.1 percent two years ago. That’s an improvement. Lest it’s forgotten, 6.1 million people are still out of work and the percentage of Americans without work for at least six months rose to 45.3 percent from 43.9 percent. Jobs recovery remains weakest on record. One commentator labeled it as nothing more than an economic sugar rush—built on expansionary monetary and fiscal policies that are unsustainable.

To me, the situation is uncomfortably reminiscent of last spring. Back then, corporates were starting to hire again, before events like euro-debt crisis ...