The speed of the US rebound from the COVID-19 crisis has left executives, investors and economists scrambling to interpret whether labour shortages and rising prices point to a short-term economic summer heatwave or a longer period of dangerous inflation.
Some of the country’s largest companies have hailed the strength of the recovery in recent earnings announcements while declining to predict whether the swift vaccination rollout and massive fiscal stimulus will cause problems for corporate America.
“The second half will likely have more uncertainty than a normal year,” Doug McMillon, chief executive of Walmart, cautioned this week, even as he and his contemporaries noted the strength of consumer spending and the prospect that elevated savings rates indicated continuing pent-up demand.
Manufacturer 3M was among an array of companies highlighting “tremendous inflation” in the costs of labour, freight and some raw materials last week, although it said it had raised prices for customers in response.
Some recent economic data has raised red flags, such as a jump in consumer prices, although it was driven by factors that might be transitory. These included a sharp rise in the price of airfares as Americans started travelling again, and higher demand for used cars sparked by a chip shortage that has dented production of new vehicles.
