He summarized key economic conditions:

The COVID-19 pandemic is a tragic natural disaster, yet history shows that natural disasters have little long-run economic impact. A quicker than normal recovery was certain.
Fiscal policies are "overheating" the economy from consumer spending to asset markets.
Geopolitical uncertainty is heating up, but the impact is largely to extend the U.S. asset cycle due to the reserve currency status of the U.S. economy.
Cyclical risks now lie primarily in the public sector; the twin issues of inflation and out of control budget deficit – but this may expand in months to come.
There is no economic "new normal" coming out of the pandemic, but it has accelerated underlying trends that were already in place, with huge implications for labor markets, land use, retail channels, housing and debt.

There's been much debate about the shape of economic recovery, and Thornberg believes it's a V shape due to a very short period of recession of only two months, followed by a voracious bounce back. It's been an uneven recovery, though, with supply not able to keep up with demand. "Look at the auto sector,'" he said. "Sales collapsed in 2020-2021 because manufacturers couldn't build enough. Data shows that up to 2.5 million additional automobiles could have been sold in the US if supply could have kept up with demand."

Instant Insights /

Economic Development Is Not About Jobs Anymore. It's About Workers

Related Stories

Recommended For You