The ability of US companies to hire and fire employees at relatively little cost gives them an advantage during periods of increased instability.
Last week, we cited Amazon and Google’s layoffs as evidence they overinvested during the pandemic. However, the fact they could unwind these decisions so promptly could be seen as a strength. Companies that can quickly respond to the increasingly volatile world will prosper most.
Even before the pandemic, the future was tricky to forecast. As this interactive graph shows, the market has been consistently bad at predicting future interest rates. During the 2010s the market refused to believe there had been a post-recession transition to a structurally lower inflation world, meaning it consistently predicted rates to be higher than they proved to be.