Looking at the economic landscape as 2021 draws to a close, one cannot help but notice the emergence of new obstacles to a robust recovery. The United States, Europe, China and others face a growing list of remarkably similar short- and longer-term challenges.

The pandemic remains the most immediate concern. Without full global vaccination, new COVID-19 variants will continue to emerge, potentially forcing governments to renew partial or full lockdowns. The coronavirus thus represents a permanent drag on the recovery.

A second challenge is the blockage of global supply chains, which, together with supply-side shifts in labor markets, has created persistent inflationary pressures unlike anything seen in over a decade. Without cross-border efforts to resolve supply bottlenecks and shortages, central banks may be forced to curtail today’s surging demand by tightening monetary policy.