Credit: Ronnie Chua, Shutterstock.com.

Economists believe that a rise in business investments is likely to boost economic growth that will help sustain the recovery.

John Ashcroft

John Ashcroft, former US Attorney General, shared an article on business investments emerging as a powerful source of US economic growth that is likely to sustain the recovery. American companies are ramping up orders for software, machinery, and computers, indicative of a more confident outlook of the economy.

According to the Commerce Department, non-residential fixed investment rose at a seasonally adjusted annual rate of 11.7% in the first quarter of 2021, led by increased spending in software and tech-equipment. Business investments also reported gains in the third and fourth quarters last year after dropping due to pandemic-related closures. It is now higher than its pre-pandemic peak levels.

Figures further reveal that orders for non-defence capital goods excluding aircraft, another indicator for business spending, are near the highest levels since the 1990s.

Simon Wren-Lewis

Simon Wren-Lewis, an economist and professor of economic policy at the Blavatnik School of Government at Oxford University and a fellow of Merton College, retweeted an article on understanding UK’s labour market, and that it is a pandemic and not a pandemonium. Economists believe that the labour market is normalising and not overheating. At most, it maybe lukewarm and that the mild euphoria has arrived earlier than the previous downturns as Brexit Britain booms even during the pandemic.

The optimism has led to a quick shift in policymakers’ concern over pandemic unemployment to the dangers of a tight labour market where it is becoming difficult to hire workers. While some believe that this could be curbing recovery, others opine that this is the beginning of a new era of worker power.

According to economists the real danger is in losing the plot, as sectors such as hospitality grapple to recruit workers and pay higher wages. They opine that a tight labour market may not be a bad after all, as unlike any recession, a key feature of the labour market during a pandemic is that the effects are sectorally unequal, marked by rapid falls and rises in activities.

Martin Sandbu

Martin Sandbu, a European economics commentator and former senior research fellow at the Zicklin Center for Business Ethics Research at the Wharton School, University of Pennsylvania, retweeted on Germany’s post-pandemic budget having implications for monetary policy and fiscal rules across the bloc.

Germany’s new budget and medium-term spending plan is one that is switching gear from whatever it takes mode to business as usual, raising concerns over how Europe’s largest economy will handle the demand and treat its fiscal policy in the pandemic era.

The budget plan for 2022 and tax and spending lines for 2023-2025 emphasise that the emergency suspension of Germany’s debt brake will continue until next year. The suspension allows the government to borrow approximately $119.19bn next year. However, in 2023, the deficit is expected to drop below $11.92bn. This is likely to happen only when the growth projections decline and unemployment remains higher than pre-pandemic levels.