The Global Economy Is Shrugging Off the Delta Variant, For Now

Even as delta risks loom, early signs from the third quarter show growth accelerating and inflation peaking after its recent jump, a reassuring sign for policy makers and investors worried about the risks of faltering demand and surging prices. Global gross domestic product in the third quarter is on track for a 1.8% expansion from the previous three months, according to a “nowcast” from Bloomberg Economics. That’s an improvement from the solid pace in the previous quarter, and leans against fears that the delta variant will slow the recovery from last year’s recession.

At the same time, consumer prices are set to advance at a less troubling pace, as inflation in the U.S. peaks and then eases back from elevated summer readings. That will be welcomed by central bankers such as Federal Reserve Chair Jerome Powell who had bet the inflation spike would prove temporary.

“Nowcasts can’t see into the future and the delta variant means the picture could change quickly,” said Bjorn Van Roye and Tom Orlik, economists at Bloomberg Economics. “For now though, the data is flagging a positive start to the third quarter, with the global recovery accelerating, and inflation moderating.”

From U.S. retail sales to China factory output, Bloomberg Economics nowcasts bring together hundreds of data points to provide a high frequency read on the pace of growth across major economies ahead of the official GDP data.

The Global Economy Is Shrugging Off the Delta Variant, For Now, Bloomberg, Aug 11