Rise in capital stock diminishes risk of severe scarring

The small rise in the net capital stock last year is an encouraging sign that the pandemic won’t damage large parts of the capital stock and leave the level of GDP lower forever more. And while we remain more optimistic than most over the outlook for the economy, people shouldn’t get carried away by the stratospheric annual growth rates that pretty much every economic indicator will deliver over the coming months. The level of economic activity will be a much better barometer of the performance of the economy.