With 2021 in the books, it’s time to look back on the major themes that we’ve covered over the last year, and to say it was a “year of flux” is a gross understatement. It has been a year of eye-watering, nose-bleeding readings across several metrics, from PPI to used car prices, from inflation expectations to negative sentiment around the cost of durable goods. But while the numbers have been impressive, the shifts in larger themes captured our and our readers’ attention.
Our most popular newsletters from 2021 all revolved around the evolving economic picture and how the Fed slowly realized that “transitory” inflation was anything but that. In “Substantial Further Progress” from the beginning of August, we dove into Fed Speak from a variety of FOMC members, weighing Clarida’s expectations “for a steady labor market recovery” against Lael Brainard’s argument that “employment has some distance to go”. Less than a month later, we offered “Powell Counterpoints” after the Chairman gave his speech at the (infamous) Jackson Hole conference. Rebutting Powell’s various reasons for believing that “elevated readings are likely to prove temporary” with the Fed’s data, we agreed with Powell’s assessment that “time will tell”. Just two weeks later, we sent a newsletter “Checking on the Dual Mandate“, finding that the incoming Fed data showed constrained employment, “brisk wage gains”, and “widespread” price pressures to boot.
But it wasn’t just shifting in the Fed’s thinking that captured our attention. This year, global shifts made headlines, with energy shortages, factory shutdowns, and export restrictions rippling across borders. However, “China Shifts” piqued our readers’ interest the most. Starting as a blog post, a “possibly historic article” made its way through Chinese state media and provided a lens for understanding a host of recent policy changes. From trivial changes to limitations on video games to larger initiatives targeting major Chinese companies like Alibaba and Didi.
To conclude, we want to thank you, whether this is your first time reading Thoughts from the Divide or you have been a subscriber since the beginning, for reading, sharing and interacting over this year of changes. From all of us at MI2 Partners, have a Happy and Healthy New Year. See you in 2022!
