Although the U.S. Federal Reserve is making all-out efforts to prevent inflation to the extent that it has carried out two consecutive giant steps (a 0.75% increase in the benchmark interest rate), fears of a global recession are spreading as it retreated to all economic activities such as production, sales, and consumption.
Citing the results of a study by the U.S. Economic Research Institute (NBER), the Wall Street Journal (WSJ) reported on the 30th (local time), “The signs of panic, which began with the advent of the COVID-19 pandemic in 2020, have been spreading at an explosive rate not only in advanced economic regions such as the U.S., Europe and Northeast Asia.”
According to a study by NBER, the global recession caused by the pandemic is spreading to all parts of each country’s economy more than twice as fast as the Lehman Brothers crisis in 2008.
The panic that began in December 2007 with the bankruptcy of Lehman Brothers, a Wall Street investment bank in New York, did not begin immediately. This is because the U.S. economy grew positively until December of the following year. In the meantime, there have been steep interest rate hikes, soaring oil prices, exhausting foreign exchange reserves, and negative growth in countries around the world except the U.S., and eventually the U.S. has entered a negative growth trajectory without overcoming such a huge recession. NBER officially declared in September 2010 that the U.S. economy was facing a panic.
The “pandemic recession” put the U.S. economy into a negative growth quagmire two months after COVID-19 began to spread around the world, leading to a global shortage of raw materials and supply chain collapse. NBER mentioned early in April 2020 that “the recession caused by the pandemic has become very clear to spread to global panic,” and in July last year, it released an analysis that “the signs of panic began to generalize.”
Until February, the global economy had been engulfed by rosy prospects for a while, predicting a boom following the easing of the pandemic. Consumption exploded, product production soared, and the employment rate rose significantly, overshadowing NBER’s analysis.
But the prospect quickly turned “grey” in the wake of the Feb. 24 war in Ukraine. Murderful inflation began to occur as energy shortages and soaring oil prices were added to the shortage of various raw materials and supply chains caused by the pandemic. With inflation, consumers’ buying sentiment froze, while companies’ economic activities began to slow down significantly.
