China’s domestic consumption-led recovery means that the spillover effects on the rest of the world are less pronounced. The bleak US outlook has put China’s performance under close scrutiny, and Western business expectations are running ahead of reality.
Consumption of luxury goods is up dramatically since the pandemic began to wane, but India won’t experience sustained economic growth and increased prosperity unless this recovery extends beyond the rich
that american consumers were spending on average an extra $750 a month. if anyone can tell us how that played out, it s the boss of the us conference board. it compiles some of the most trusted research on the american consumer as well as insights on china. steve 0dland, how did revenge spending pan out in the usa? well, coming out of covid you saw consumer balance sheets that were swollen, lots of cash provided by that savings that had happened when they couldn t spend, but also government stimulus. and you saw the spending on goods surge. now we re coming off of that and you re seeing the services come back, and so the revenge spending continues in the service sector while the goods sector tapers off here. we re not quite back to pre covid spending levels in the service sector, so we should see a little bit more of that continue here into this year and a normalisation.
we ve had lots of things contributing to inflation the energy crisis, labour shortages. how much blame do you put on revenge spending? well, you know, when you lock it down and you re producing nothing, all supply chains collapsed for a period of time, there was no supply. and so you had all this demand and all this money chasing too few goods and no services. so, you know, it s a complete imbalance between supply and demand, and that has created an enormous amount of this inflation, on top of the government spending and easy money policies both here in the united states but also around the world. and so you had all this money chasing too little supply and of course the inflation comes in. now it s the reverse, as interest rates are rising, the cost of debt and the cost of money has increased and so you see now a tilt towards a recessionary period.