Hello. Today we look at working from home’s impact on productivity, the global supply chain frictions and why September is proving to be less great for the U.S. economy than anticipated.
The WFH Effect
The working from home revolution is here to stay and economists are staring to see the potential for a productivity payoff.
Libby Cherry dived into the data and academic research for Bloomberg’s latest “Big Take.”
Among her findings:
- One estimate that a day at home would lift U.S. productivity by 4.8%
- 2013 research that working from home boosted efficiency by 13%
- Analysis that found happy workers closed more sales
The “positive consequences will be there indefinitely,” reckons Stephen J. Davis of the University of Chicago.
But not all are so upbeat. The Federal Reserve of San Francisco recently warned against reading recent gains in productivity data as due to more home-working, citing data distortions
And a study led by the University of Chicago’s Michael Gibbs found workers worked longer hours at home to perform the same task, as focused time was broken up by domestic distractions like childcare and online meetings.
Also, not everyone has the option. In the U.K., for example, just 36% of people did some work from home during 2020, even during lockdowns.
Mixing It Up
All sectors envisage more regular home working post-pandemic
Source: OECD
Note: Share of workers that plan to work at least one day a week at home
However, it shakes out for economies it is clear that the revolution is here to stay as even Fed Chair Jerome Powell acknowledges:
“We know that we’re not simply going back to the economy we had before the pandemic, but it will take time to see exactly what the changes will be,” he said this month. “It seems a near-certainty that there will be substantially more remote work going forward. So that’s going to change the nature of work, and the way work gets done.”
The Economic Scene
Ocean View
Spot rates for shipping containers from China to U.S., Europe hit new highs
Source: Drewry World Container Index
*Note: FEU refers to a 40-foot container
A supply chain crunch that was meant to be temporary now looks like it will last well into next year as the surging delta variant upends factory production in Asia and disrupts shipping, posing more shocks to the world economy.
Manufacturers reeling from shortages of key components and higher raw material and energy costs are being forced into bidding wars to get space on vessels, pushing freight rates to records and prompting some exporters to raise prices or simply cancel shipments altogether.
Those higher freight rates and semiconductor prices could feed into inflation, undermining policy makers’ assumptions that higher prices are transitory.
Today’s Must Reads
- The September issue | The delta variant is jeopardizing the comeback in the U.S. economy that most commentators timed for the Fall.
- All eyes on Powell | Having already dashed plans for Fed officials to meet in person in Jackson Hole this week, rising coronavirus cases are now limiting what Powell can say about what comes next for U.S. monetary policy. Matthew Boesler investigates what to watch when the Fed chair speaks Friday.
- Rate rise | South Korea raised interest rates on Thursday, becoming the first major Asian economy to do so as financial risks are seen to pose a bigger threat to the economy than the latest virus wave.
- China target | President Xi Jinping said China will strive to achieve key economic and social development targets this year, while maintaining strict virus controls. Meantime, there’s already signs the regulatory crackdown is hurting the economy.
- Hooking up | London’s younger workers appear to be returning to offices and seeking nights out, according to data from a mobile-phone dating app that matches 10,000 people a week.
- India steadies | India’s economy held steady in July as waning Covid-19 cases paved the way for a gradual improvement in manufacturing and services activity.
Need-to-Know Research
It’s all about the timing. And communication. That’s the verdict on the Fed’s taper from Bloomberg Economics’s Björn van Roye and Tom Orlik ahead of Chair Jerome Powell long-awaited address on the virtual Jackson Hole stage on Friday. If the Fed surprises with a taper when conditions aren’t right, activity and asset prices would take a hit, they said. U.S. GDP at the end of 2022 would be about 0.7% lower, and 10-year yields around 30 basis points higher, relative to a smooth taper scenario.
Bloomberg Terminal clients can read the full research here
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What's Happening in the World Economy: Hybrid Work Revolution Is Just Starting - Bloomberg
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