Contributions to Percent Change in Real Gross Domestic Product – Annualized Rate (Source: Bureau of Economic Analysis) 2023 Q1 2023 Q2 2023 Q3 2023 Q4 2024 Q1
3.4
1.6
GDP
2.2
2.1
4.9
2.20 0.15 0.79 0.25 2020
1.68 0.56 0.21 -0.86 2021
Personal Consumption
2.54 -1.69 0.82 0.58 2017
0.55 0.90 0.57 0.04 2018
2.11 1.74 0.99 0.03 2019
Investment
Government Spending
Net Exports
2022
-2.2
5.8
1.9
GDP
2.5
3.0
2.5
-1.69 -0.85 0.56 -0.24
5.59 1.52 -0.05 -1.25
1.72 0.86 -0.16 -0.48
Personal Consumption
1.79 0.77 0.10 -0.20
1.86 1.02 0.35 -0.26
1.35 0.55 0.68 -0.12
Investment
Government Spending
Net Exports
Inflation Global inflation has declined significantly since peaking in 2022; however, global inflation rates remain higher than desired. The table below shows the annual inflation rate for Europe, the United Kingdom, Canada, Australia, Mexico and the United States from 2017 through March 2024. Although there are regional differences, note that the trends in inflation are similar across most countries, with relatively low inflation between 2017 and 2019 and a drop in inflation in 2020 due to the global COVID economic contraction. Inflation picked up in 2021 and peaked in 2022 before declining in 2023. The trends are similar across countries because global factors have impacted global prices. Near record or record levels of inflation were recorded for the United States, the Euro Area, Canada, and the United Kingdom in 2022. Global inflation increased in 2021 as supply chain problems appeared and global oil prices began rising due to the economic recovery. Those factors peaked in 2022, and included price spikes in global energy and food prices related to Putin’s invasion of Ukraine and lingering supply chain issues which contributed significantly to inflation. Russia is a leading global exporter of oil, and oil prices spiked from approximately $75 a barrel in late December 2021 to almost $120 a barrel in June 2022 after the Russian invasion of Ukraine in February caused great uncertainty in global oil markets. The increased oil prices not only affected global energy costs, but also transportation costs for goods worldwide, both key factors contributing to global inflation. The Russian invasion of Ukraine also had a significant impact on food prices. Russia and Belarus comprise nearly 20 percent of the global export market share of all fertilizers, and global fertilizer prices rose to record levels in 2022. The Russian invasion of Ukraine triggered import-export restrictions that compounded supply problems. Wheat prices spiked 50% in early 2022, as wheat exports were disrupted by the war. (Russia and Ukraine accounted for approximately 30% of global wheat exports prior to the war.) Supply chain disruptions, exemplified by the semiconductor chip shortage, became prominent in 2021 and continued into 2022. Between April 2021 and July 2022, new vehicle prices in the U.S. increased nearly 16% with sales declining by over 26%. In 2023, the mitigation of these global factors led to a significant decline in inflation throughout the world. After peaking at nearly $120 a barrel in June 2022, oil prices were approximately $75 a barrel in June 2023. The October 2023 price of wheat declined nearly 50% from its peak in February 2022. Supply chain problems also generally improved as global economies recovered from the pandemic.
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Center for Business and Economic Insight
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