Four years ago, the unthinkable happened. The World Health Organisation declared Covid-19 to be a global pandemic on 11 March 2020, and over the subsequent days, many countries imposed lockdowns, including South Africa.
But it also proved to be true when inflation turned out to be more entrenched than initially thought. When the Fed and other central banks turned their attention to fighting inflation in 2022, equity and bond markets fell simultaneously in what was the worst year for global balanced portfolios in decades.
The US government’s seemingly endless willingness – and ability – to borrow money also helped. The CARES Act package was followed up by another stimulus injection in December 2020, the $1.9 trillion American Rescue Plan in March 2021, and President Biden’s signature Inflation Reduction Act. These companies were born as ideas in the heads of founders, who are often students at America’s elite universities. To turn these ideas into businesses requires an entrepreneurial, risk-taking culture, but also funding.
While the rest of the world has been debating whether the inflationary surge of the past two years will recede, the question in Japan has been whether it will stay. The recent annual round of wage negotiations between unions and large firms, known as shunto, looks set to deliver the biggest wage increases in a decade.