World Economy Will Grow Rapidly In 2021

Europe is having trouble with vaccinations largely reflecting less foresight than America’s Operation Warp Speed, which paid for vaccines from multiple companies before they were tested and succeeds even if only one vaccine works out. Perfect foresight is not needed, just a willingness to risk looking foolish. Perhaps a greater entrepreneurial attitude in the U.S. and the UK accounts for the difference. Nonetheless, good vaccines have been developed and are in production. Europe will eventually get most of its citizens jabbed and the economy will thrive.

Chart of oil prices from 2018 through March 2021


Widespread expectations for a global rebound are illustrated by commodity prices. In general, metals and petroleum can experience much faster demand changes than supply changes. So when demand surges, prices rise sharply. Demand, however, can be for current usage or for inventory to meet future demand. Oil prices have risen sharply due to expectations for greater future consumption. Oil received an extra boost from Russia and OPEC limiting production, but such limitations usually prove temporary.

Other industrial commodity prices have also increased. “Dr. Copper” is said to have a Ph.D. in economics because it forecasts the future production of both consumer and industrial goods. The price of copper is now within spitting distance of a 60-year high.

Ocean shipping has surged, with delays for ships trying to unload containers in Los Angeles/Long Beach, Oakland, and Savannah. Shipping costs are four times higher than a year ago. Part of the shipping delays, though, come from social distancing among dock workers, which is not a sign of economic strength.

In another indication of the improving global economy, interest rates are rising around the world, though not be as much as the U.S. experienced. The global demand for credit tends to rise with the economy, more than the global supply of savings. Thus interest rates tend to rise when the economy is strong, or expected to be strong in the near future.

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