The future of shopping • Covid risk • American democracy • Britain’s royal ructions
CONSUMERS IN THE rich world are sitting on piles of pandemic savings. In America a big chunk of that is held by poor households, who are likely to spend it, opening up the prospect of a turbocharged economic bounce-back. From April to September America is likely to outgrow even China, which has just unveiled its new five-year plan. In this context, its new $1.9trn fiscal stimulus is a massive gamble. If it pays off America will avoid the miserable low-interest-rate, low-inflation trap in which Japan and Europe look stuck, and other central banks may imitate the Federal Reserve’s recent tolerance of sudden spurts of inflation, as the prices of commodities, notably oil, surge. Mr Biden’s spending will further boost global demand for goods. America’s trade deficit is already more than 50% greater than before the pandemic, as the economy sucks in imports.
If a consumer-led boom is to come, it will be very different from previous ones. Global shopping is changing. The shoppers are increasingly Asian, increasingly value-conscious and increasingly online. The e-commerce behemoths of today are not as impregnable as they seem. Many different types of consumption have moved online, from gaming for youngsters to financial services, with China having gone furthest in the evolution of fintech, leaving the government struggling to keep control. Japan Inc, meanwhile, is trying to change its status as one of digitisation’s surprising laggards.
The rebound depends of course on vanquishing the pandemic. In this, Europe is for now doing badly, with lots of new cases but few vaccinations. India, by contrast, has suffered a surprisingly low national death toll. The Economist has developed an interactive covid-risk estimator. For any group of unvaccinated people of a given age, sex and 29 different pre-existing medical conditions, it estimates the risk of hospitalisation. As vaccination spreads, vaccine passports offer a beguiling route back from lockdowns to freedom. But they have only a modest role to play in the return to life as normal. Meanwhile, the goal of universal vaccination is colliding with outbreaks of vaccine nationalism.
American democracy looks tired. One reason for this is the filibuster. America is unusual in requiring a supermajority in the legislature even for routine business, rather than just, say, constitutional changes. The increasing use of the manoeuvre favours stasis, and channels power to the president and Supreme Court. But it retains powerful supporters, such as Joe Manchin, a Democratic senator for West Virginia. It is not just Congress that is under strain. So are elections. The contest over how they should be conducted has escalated since Donald Trump left the White House. A new round of “redistricting” of congressional constituencies, based on the 2020 census, is likely to favour the Republican Party.
At home and abroad, many have been riveted by the latest signs of ructions within the British royal family. At home, the queen and Prince William, her grandson, remain far more popular than Prince Harry and Meghan Markle, the Duke and Duchess of Sussex. The interview the Sussexes gave to Oprah Winfrey led to accusations of royal racism, and broader introspection over race relations in Britain. It was at least a break from Britain’s other preoccupations. Besides the pandemic, it is facing mounting evidence of the costs of Brexit, including heightened tensions in Northern Ireland. Britain needs, therefore, to exploit to the full the precious few advantages that Brexit does offer, in enabling it to adopt nimbler regulation.
By The Economist
