When the pandemic first became widespread, in early 2020, governments locked down their economies. Consumer spending fell sharply, employers shed workers and prices fell. Within a few months, the rise of e-commerce and remote working allowed the economy in many developed countries to recover rapidly. With mass vaccinations, that recovery has continued this year.

Now, new case surges are having much less severe impacts on spending and job creation. Instead, they are threatening to prolong supply-chain disruptions and keep inflation elevated.

“What we saw in the early stages of the pandemic is that demand initially dropped a lot more than supply so it ended up being deflationary, particularly because of pretty stringent lockdowns,” said Paul Ashworth, chief North America economist at Capital Economics.

Today, with governments reluctant to impose new lockdowns, it is the other way around, he said.