“The Great Resignation”
is now global. In April in the US, almost 4 million people left their jobs in search of greener pastures. The Great Resignation is Covid-induced and is triggered by two main reasons: (1) the decision to leave dissatisfying or meaningless jobs; (2) the willingness to abandon jobs that do not offer some flexibility (like working less or WFH – “Working from Home”). In the immediate future, this forces employers to offer higher wages and better incentives.
Cyber-attacks and ransomware are on the increase globally
becoming more targeted and ‘strategic’ in nature. In the US, the FBI is currently investigating about 100 cases of ransomware, many of which came with broad economic impact on top of the business shock (like the attack on the meatpacking company JBS that cut off 20% of US beef-and pork-packing capacity, leading to a temporary shortage and higher prices). In our new era of hybrid warfare, cyber occupies a position of choice. Analysts concur it’s a game of whack-a-mole that will intensify because this invisible war makes retaliation very difficult.
Many decision-makers suffer from problems rooted in the “attention economy”
Attention is our most precious resource but it’s getting scarcer. The Attention Economy – hyper-connectedness, an overabundance of information and social media’s noise – has hijacked our brains, compromising both our time and ability to think, and as a result to make good decisions. In our most recent “Ask our Expert” conversation, Scott Kirby shared the formula of his antidote (some of his tips sounded counter-intuitive for high-achievers). United Airlines’ CEO, whom US media often portrays as visionary, sleeps a lot (8-9 hours a night), reads a lot (about 3 hours a day + a novel a week), exercises a lot, restricts meetings to 4 hours a day and formal presentations to just one slide.
Global GDP continues to gain momentum
Impressive rates of growth, most notably in the US and China. However, it is important to keep this vibrancy in perspective: by the end of 2021, the global economy will still be 2% smaller than it was at the end of 2019. Furthermore, escape velocity is far from a given with many risks still on the downside. The pandemic is not over despite the market perception that it is.
Concerns about inflation are abating
Data are showing that some prices are plunging while others are receding. This confirms our conviction that recent price increases are pandemic-induced and most likely transitory. Core inflation has gone higher and will remain above-trend for some months, but a general increase in prices can only take hold if central banks lack the resolve to cool off the economy; which the most probably won’t.
It’s ‘official’: the “Cornwall consensus” is replacing the Washington consensus.
The Cornwall consensus places solidarity, inclusion, and better governance at the core of “Building Forward Better”. The new tax proposal is a practical example of the direction Cornwall consensus policies are taking. G7 finance leaders have just agreed on a 15% global minimum tax rate payable regardless of where companies book their profits. Cracking down on tax evasion and tax optimization has now become a top global policy priority. Taxation and all sorts of ideas on how to make it fairer will be a core component of the G7 “Building Forward Better”.
The US stock market is at yet another all-time high
The US stock market is at yet another all-time high, up 14% since the start of 2021. Corporate earnings lie behind this success. Dominant players across all industries – not only tech – benefit from considerable market power thanks to economies of scale and network effects which enables them to check competition and stifle innovation. Bottom line: the stellar performance of quoted companies is not the sign of a healthy economy – it obscures the fact that an overwhelming number of SMEs have a hard time, facing harsh environments with little or no profits
Download the full article: The Inside Track July 2021