Who Gets Credit for No-Recession 2023? Everyone and No One (Elisabeth Dellinger — 12/18/2023, Fisher Investments)

[T]he basic, simple yet powerful story of the past few years appears to be this: It is far easier to turn an economy off, as lockdowns did in 2020, than it is to turn it on again—especially when different countries are firing back up at different times and speeds. The US got going before Europe got going before Japan got going before China. So you had demand boom in one place before supply in another was capable of meeting it. Even in the US, some states and industries reopened before others, creating a mismatch for made-in-the-USA goods and services. For just one example, I was back in the office before I could get my hair cut without crossing state lines.[iii] First-world problem, maybe, but it is mostly a microcosm of the broader picture: Lockdown and reopening caused countless dislocations and disruptions that couldn’t resolve until the whole world, developed and developing, moved beyond lockdowns. Parallel to all of this, the world’s energy markets had to realign after Russia’s Ukraine invasion and the resulting sanctions, which shifted oil and natural gas supply and demand globally. That took a while, too, but at this point it is largely solved.

Furthermore, a lot of the reopening decisions in the US were business-specific, not government-ordained. When the economy was shut down, some companies innovated or otherwise managed through it, quickly returning to normal operations when allowed. Others waited. To each their own—no judgments here! The key is this: It speaks to how decentralized and messy a developed economy really is. In the Western world, as the UK has shown lately, governments can’t even order civil servants back to the office, much less private workers. In the end, businesses respond to conditions—all conditions—as incentives dictate.

Governments can tweak those incentives, but that is about it.

Turns out a gl;obal pandemic was disruptive…briefly.