Business leaders and economists at the World Economic Forum’s annual gathering in Davos say high inflation and risk of recession are weighing heavily on their minds
This year, though, many are worried the “next big thing” might be “the next big recession.”
Beyond the mandatory coronavirus tests, the mood is decidedly somber, weighed heavily by concerns of the coronavirus crisis, continuing war, widening economic inequality and fears of a global economic slowdown. “We’ve never had a Davos like this one,” Rich Lesser, global chair of Boston Consulting Group, said in an interview. “The challenges of the world feel pretty immense. There is a lot of uncertainty and anxiety about the tightrope governments need to walk to contain inflation without pushing economies into recession. How will the war play out? What will happen in China? We’re staring into all of that.”After months of solid growth, the U.S.
But there are also signs of continuing economic momentum. American consumers, who have been spending heavily on big-ticket items, have so far been a bright spot in the economy. But some executives say that momentum is beginning to subside as households work through the money they saved up early in the pandemic. Average savings accounts rose to roughly $2,000, up from $400, in large part because of government stimulus, Dan Schulman, chief executive of PayPal, said during a panel at the forum.
“We are already seeing a reduction in spending at lower-income levels for sure, and it’s moving up to middle-income right now,” Schulman said, adding that inflation poses yet another challenge to consumer spending. “Based on my conversations with leading retailers around the world, none of us think things are going to come back by the end of this year. We’re all planning for inflation to remain high.”Inflation, which remains stubbornly at 40-year highs, has lifted prices 8.
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