It’s all just a little bit of catch-up growth. Not that you’d know it from the hysteria that’s now grabbing commodity markets. Recall that when discussing rising commodity prices in recent months, we produced this chart:
Notice the steep acceleration in activity and inflation from the bottom owing to “catch-up growth”. This can even overshoot trend for a short time before falling back.
During “catch-up growth” demand is double-juiced because much of the spending that was idled and missed during the pandemic returns just as new spending joins the party. Basically, you get two years’ worth of growth in one.
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