Today’s Global Economy

The economy today continues to change, adjust and move up and down.  Let’s take a look at today as we look back to compare. In the following discussion, I will address the recent questions raised about my personal perspective on the current state of the global economy.

Economic conditions fluctuate due to a myriad of factors, including policy changes, technological advancements, and global events. To assess the state of today’s economy in comparison to 36 months ago, one must explore several dimensions: employment rates, inflation, technological impacts, trade dynamics, and overall economic growth. Let’s attempt to delve into these aspects and illustrate how the economic landscape has evolved and improved over the past three years. Three years ago, the global economy was grappling with the aftermath of the COVID-19 pandemic, which had significantly disrupted labor markets. Lockdowns and restrictions had led to unprecedented job losses, with many industries, especially hospitality and travel, being severely impacted. As of today, the labor market has shown remarkable recovery.

Employment rates have rebounded strongly, with many economies experiencing job growth as businesses reopened and adapted to new operating conditions. In countries like the United States and many European nations, unemployment rates have returned to or even fallen below pre-pandemic levels. This improvement reflects a robust recovery in job creation, supported by both consumer demand and business confidence. The participation rate, which measures the proportion of working-age individuals actively engaged in the labor force, has also seen an improvement. The shift towards remote and flexible work arrangements, accelerated by the pandemic, has contributed to increased labor force participation, particularly among groups that were previously underrepresented or less active in the workforce. For instance, more women and older individuals are now participating in the labor market, driven by flexible work options and inclusive hiring practices.

Inflation rates were a significant concern 36 months ago, driven by supply chain disruptions, fluctuating demand, and various other pandemic-related factors. The period of high inflation created challenges for consumers and businesses alike, impacting purchasing power and cost structures. However, recent trends indicate that inflation has stabilized. Central banks, such as the Federal Reserve in the United States and the European Central Bank, have implemented measures to control inflation, including adjusting interest rates and employing monetary policy tools. These efforts have contributed to a more stable inflation environment, helping to ease the cost-of-living pressures experienced during the peak of the pandemic.

The cost of living has shown some stabilization, thanks to improvements in supply chains and a return to normalcy in many sectors. Prices for essential goods and services have moderated, and the rate of price increases has slowed. This stabilization is crucial for maintaining consumer purchasing power and ensuring economic stability. The last three years have witnessed rapid technological advancements, driven by the need for businesses to adapt to new operating environments. Digital transformation has accelerated, with companies investing heavily in technology to streamline operations, enhance customer experiences, and improve efficiency.

Technologies such as artificial intelligence (AI), automation, and cloud computing have become integral to business strategies. These advancements have not only improved productivity but also created new opportunities for economic growth. The rise of tech-driven sectors has contributed to job creation and economic development, showcasing the positive impact of technological progress. The pandemic expedited the adoption of e-commerce and remote work, which have since become permanent fixtures in the economic landscape. E-commerce has expanded rapidly, providing businesses with new revenue streams and consumers with increased convenience. Remote work, on the other hand, has transformed traditional work models, offering greater flexibility and enabling companies to tap into a global talent pool.

These shifts have had lasting effects on the economy, fostering innovation and creating new market opportunities. The growth of the digital economy has played a significant role in the overall economic improvement observed today. The disruptions to global supply chains during the pandemic highlighted vulnerabilities in international trade networks. Since then, there has been a concerted effort to build more resilient supply chains, incorporating lessons learned from the pandemic. Companies have diversified their supply sources, invested in supply chain technologies, and adopted more agile practices. These improvements have contributed to a more stable trade environment, reducing the frequency of supply chain disruptions and supporting global trade growth. The emphasis on resilience has enhanced the reliability of global trade networks, positively impacting economic stability.

In recent years, there has been a renewed focus on trade agreements and international relations. Many countries have pursued new trade deals and strengthened existing partnerships, aiming to enhance trade flows and economic cooperation. These agreements have facilitated smoother international trade and investment, supporting economic growth and stability. Economic growth has resumed following the pandemic-induced downturn. Many economies have experienced a robust recovery, with GDP growth rates returning to positive territory. The rebound in economic activity is driven by consumer spending, business investments, and a resurgence in global trade.

In addition, governments have implemented stimulus measures and economic policies to support recovery and growth. These initiatives have played a crucial role in boosting economic activity and fostering a more favorable economic environment. Business confidence has improved significantly over the past three years. Companies have regained optimism about economic prospects, leading to increased investment in infrastructure, technology, and innovation. This positive sentiment is reflected in higher levels of capital expenditure and entrepreneurial activity, contributing to a more dynamic and resilient economy. The economic landscape today is markedly better compared to 36 months ago. The labor market has recovered, inflation has stabilized, and technological advancements have driven growth and efficiency. Improvements in supply chain resilience, trade dynamics, and overall economic stability underscore the positive changes that have taken place.

While challenges remain, the progress made over the past three years highlights the adaptability and resilience of the global economy. As we move forward, the continued focus on innovation, sustainability, and inclusive growth will be essential for sustaining economic improvement and addressing emerging challenges.

Jerry Sager
Managing Director, First National