After four years of unprecedented global chaos, inflationary chaos and violent swings in the Swedish economy, it seems that the economy is actually on its way to normalcy.
Not too weak, not too strong. Most things in reasonable amounts.
Admittedly, we still have a recession. But the Norwegian Economic Institute’s new large quarterly barometer shows that the Swedish economy continues to take steps upwards, towards growth. Last month we were back in the same economic balance as in autumn 2019, just before the pandemic.
Here are three things that point right.
Inflationary pressure continues to fall
The great relief is that inflation continues to fall and – as confirmed by the Norwegian Economic Institute’s new figures – may fall even more in the future.
Here’s a good sign: Two years ago, exactly 0 percent of Swedish stores intended to lower their prices. Now it is one in six companies in the trade that do so. Unusually many.
In general, Swedish companies have completely changed their expectations of both their own prices and the general cost trend. Last month, companies’ inflation expectations fell to 1.5 percent. Clearly below the Riksbank’s 2 percent target, which reinforces the signal that interest rate cuts are soon here.
The companies still want to hire
In the last year, unemployment has risen and the situation is still quite dark in the construction industry. But the problems have so far not spread. We have escaped major notices, deep cutbacks and a vicious circle in the Swedish labor market.
In the Norwegian Economic Institute’s latest figures, there is actually a slight tendency among companies to want to hire again. One in four companies report that they have a labor shortage. Half of the industrial companies lack staff.
This suggests that the Swedish labor market is about to get through the interest rate shock. Not completely without damage, but without a major disaster. And with pretty good hope for recovery going forward.
Households believe in better finances
Swedish households have taken the inflation shock and interest rate increases hard. Not in several decades have we been as pessimistic about our own economy as in the past two years.
But the mood is now continuing to rise, according to the Norwegian Economic Institute’s figures. People have started to worry less about becoming unemployed. When incomes rise, inflation falls and interest rates are probably on the way down, we look more brightly at the future. And it doesn’t seem like the optimism is based on unrealistic expectations of super-low interest rates and big price drops in stores. It is a cautious – and certainly wise – hopefulness. Finally intermediate milk in the Swedish economy.
Read more: Many choose variable interest rates
