How We Learned To Be Lonely

Illustration of a person lying on their back while trapped inside a transparent cubeJan Buchczik

In the early days of the pandemic, many of us got used to solitude. It’s a habit we need to break.How to Build a Lifeis a column by Arthur Brooks, tackling questions of meaning and happiness. Click here to listen to his podcast series on all things happiness, How to Build a Happy Life.

Communities can be amazingly resilient after traumas. Londoners banded together during the German Blitz bombings of World War II, and rebuilt the city afterward. When I visited the Thai island of Phuket six months after the 2004 tsunami killed thousands in the region and displaced even more, I found a miraculous recovery in progress, and in many places, little remaining evidence of the tragedy. It was inspirational.

Going from surviving to thriving is crucial for healing and growth after a disaster, and scholars have shown that it can be a common experience. Often, the worst conditions bring out the best in people as they work together for their own recovery and that of their neighbors.

COVID-19 appears to be resistant to this phenomenon, unfortunately. The most salient social feature of the pandemic was how it forced people into isolation; for those fortunate enough not to lose a loved one, the major trauma it created was loneliness. Instead of coming together, emerging evidence suggests that we are in the midst of a long-term crisis of habitual loneliness, in which relationships were severed and never reestablished.

Many people—perhaps including you—are still wandering alone, without the company of friends and loved ones to help rebuild their life. If your life has not yet gone back to its 2019-era “normal,” you are not alone. In a poll conducted in March 2022 by the Kaiser Family Foundation, 59 percent of respondents said they had not fully returned to their pre-pandemic activities.

One of the routines that remains disrupted is work, which for millions of Americans went from a social experience to one of isolation: sitting behind a computer screen, miles away from others. And it probably won’t return to “normal,” especially for office jobs. According to the U.S. Census Bureau, the percentage of people working from home more than tripled from 2019 to 2021.

Universal remote work is no longer necessary from a public-health standpoint, yet in 2022, 59 percent of those who say their jobs can mainly be done from home are still working at home all or most of the time. Most are doing this by choice, despite the fact that 60 percent say they feel less connected to their co-workers than they had before the pandemic.

More serious for happiness is that many people now prioritize socializing for fun less than they used to in the “before times.” Friends whom I’ve recently seen for the first time since 2020 tell me they still almost never go to parties or to others’ homes, even though they used to go out frequently before the pandemic. In a poll that the Pew Research Center conducted in May 2022, 21 percent of respondents said that socializing had become more important to them since the coronavirus outbreak, but 35 percent said it had become less important.

Some people are probably seeing their loved ones less because of continued fear of disease. But when I’ve pressed friends for an explanation, the typical response has been, “I just got out of the habit.” This anecdotal evidence is backed up by data: Most respondents in a spring 2022 survey of American adults said they found it harder to form relationships now, and a quarter felt anxious about socializing. Only 9 percent were worried about being physically near others; the biggest source of anxiety (shared by 29 percent) was “not knowing what to say or how to interact.” Many of us have simply forgotten how to be friends.

This growing habitual loneliness is a public-health crisis. Research has consistently shown that isolation is linked to depression and anxiety. It has also been shown to lead to premature mortality, worsen cardiovascular health, increase inflammation, and disrupt hormones and sleep.

This harm is not equally distributed. Researchers at the Institute for Family Studies have found that in America, rates of unhappiness rose from before the pandemic (2012–18) to after the worst phase (2021). However, of those studied, two groups saw their rate of unhappiness rise more significantly than the others: single people and those who did not regularly attend a religious service. People in these groups likely have less automatically programmed social interaction than others.

Children, too, may be especially vulnerable. Kids born during the pandemic missed a crucial window of socialization, and a study of babies in Dublin published in the Archives of Disease in Childhood found that they are, on average, exhibiting deficits in communication. Compared with those born from 2008 to 2011, they are less likely to say one definite or meaningful word, to point, or to wave bye-bye by 12 months of age.

Most of these babies enjoyed less interaction with a variety of people than they would have in the absence of a pandemic. We have no idea what the long-term implications will be. If habitual loneliness is causing so much misery, why aren’t the habitually lonely taking greater steps to fight it? Why aren’t they insisting on working in person and reconnecting with friends? One possible answer is that, as research has shown, loneliness likely inhibits our executive function, which we need in order to deal with our distress appropriately.

Think of a time when you felt very lonely, and instead of doing what you really needed to do—call people, get outside, and be social—you cocooned on the sofa by yourself. Loneliness, like homelessness or poverty, tends to be self-perpetuating: Much as it is harder to get on your feet once you no longer have a place to sleep and shower, an address, or a phone, social isolation leads to behavior that leads to even more isolation.

If you’ve been seeking remote work instead of in-person work for convenience, choosing solitary activities over group ones because of awkwardness, or electing not to reestablish old friendships because of sheer torpor, you may be stuck in a pattern of learned loneliness. To break out of the cycle, you might need to try an “opposite signal” strategy. Your inertia probably tells you that getting dressed and going to work will be a hassle, and that inviting someone over for dinner will be uncomfortable. You should do these things anyway.

Think of it like starting a workout routine after a long sedentary period (another common COVID problem). At first, your system complains bitterly, but if you push through the complaints, you soon find that you can exercise (or socialize) easily, because it has become routine and because you can feel how it improves your life.

There is no law of nature saying that if you wait long enough, you will be happy again. You must proactively manage your own environment. Insist on working in person with others; become a hub for physical gatherings of friends. If your circumstances make COVID a continuing threat—say, if you are immunocompromised—taking the initiative in forming plans that fit your needs is particularly important. I have friends who are very social in their home, for example, but who test all their guests because of their particular health status.

In doing so, they are accepting what is really just a minor inconvenience in order to maintain their “friendship chops.” COVID-19 may well have cut a groove of loneliness into your life. Going with what is easy and convenient in work and friendship cuts that groove deeper, making your isolation harder to escape. But if you can remember the warmth and happiness of your old social self and make a few changes, 2023 can be a year of renewal.

By Arthur C. Brooks

Source: How We Learned to Be Lonely – The Atlantic

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How YoDrive Hosts and Manages All Your Files From One Easy Dashboard

World-Class platform, “YoDrive ” to Store, Backup, Share & Deliver All Your Videos, Images, Docs, or Any Other Files at lightning FAST SPEED. No monthly fee ever.You can convert more leads & sales with FAST Videos, Boost Website Speed, and Tap Into Fastest Growing E-Learning, Video Marketing, And Online Business.

Now, if you really need this type of platform then complete my YoDrive Review. YoDrive Helps You To Host & Deliver UNLIMITED HD Videos, Training, Website Images, & Media Files with NO Monthly Fee Ever

YoDrive allows you to: 

Store & Manage Video Training, Website Images, PDFs, Docs, Audios or Any File,  Supercharge Client Projects And Get More Engagement, Sales & Customer Satisfaction. Accurate Analysis to Know Your Engagement On Your Files & Folders. Publish Training, Files & Folders On Engaging Doc Sharing Channels Those Have Protected Elegant & SEO Optimized Sharing Pages

Captivate Your Audience with Your Media Content In 3 Easy Steps:

    • STEP 1: Upload – Simply drag and drop your files into Yodrive Reloaded or upload from your PC. It supports almost all type of files – videos, Images, audios, documents etc.
    • STEP 2: Get File URL/Code – YoDrive gives you a single line of code to share your media anywhere after optimizing it according to internet speed & make multiple resolutions for faster delivery on any device.
    • STEP 3: Store, Publish & Profit – Just paste the code on any page or get a secure DFY file sharing URL with your file to publish your content anywhere online to start getting more eyeballs and get paid.

YoDrive Has TONS Of Other Innovative & Never Seen Before Features:

Host And Manage All Your Files From One Easy Dashboard – Videos, Web Images, PDFs, Docs, Audio, And Zip Files

Super-Fast Delivery (After All, Time Is Money!) – This Lead To More Engagement, Leads & Sales.

Play Sales, Demo & Training Videos In HD On Any Page, Site, Or Members Area.

Tap Into HUGE E-Learning Industry – Deliver Your Videos, Docs, And PDF Training On Done-For-You And Beautiful Doc Sharing Sites & Pages.

Use Our App To Help Speed-Up Your Website, Landing Pages & Online Shops With Fast Loading & Optimized Images & Videos.

Build Your Online Empire – Deliver Digital Products Securely, Fast & Easy

Generate Tons Of Leads & Affiliate Sales – Deliver Freebies & Affiliate Bonuses To Your Subscribers Without A Hitch

Share Your Files Privately With Your Clients, Customers & Team Members.

Free Hosting Is Included, Unlimited Bandwidth & Upto 250 GB Storage

PLUS, Limited Time Free Commercial License (Only For Today) To Serve Your Clients

Elegant, SEO Optimized & 100% Mobile Responsive File Share Pages

Inbuilt Lead Management System

Access Files Anytime, Anywhere Directly From The Cloud On Any Device!

Highly Encrypted Unbreakable File Security With SSL & OTP Enabled Login

  1. 30 Days Online Back-Up & File Recovery So You Never Lose Your Precious Data And Files.

Single Dashboard To Manage All Business Files- No Need To Buy Multiple Apps

Manage Files Effortlessly – Share Multiple Files, Full Text Search & File Preview

Inbuilt Elegant Video Player With HDR Support

Real-Time Analytics For Every Single File You Upload – See Downloads, Shares, Etc.

Easy And Intuitive To Use Software With Step-By-Step Video Training 

100% Newbie Friendly & Fully Cloud Based Software

Live Chat – Customer Support So You Never Get Stuck Or Have Any Issues

Personal / Commercial License included – Use For Your Clients

Provide High In Demand Services

YouTube videos are full of distracting ads that can turn your viewers off while making you look unprofessional and massively lowers your engagement. Also, you don’t have 100% control of your videos and channel & your accounts can be suspended at any time without even any prior notice.

Additionally, other free cloud storage services are built up only for storage and have very limited features & tons of restrictions. And their architecture is not built for Content Delivery & Fast-Loading . Get your customers up and running faster, increase their knowledge and boost their interactions with your product. Deliver trainings instantaneously when they need it and give them an unforgettable seamless experience.

Source: https://www.yodrive.co

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The Year In Franchising: Reflecting On 2021, And Anticipating 2022

Over the past two years, the world has changed in ways it never has before, and the franchise industry is no exception. It has taken a while, but following the challenges of the Covid-19 pandemic, 2022 is positioned to be a massive year for franchise development and sales growth. First, as we wrap up 2021, let’s take a look back at how the franchise industry has adapted to the ups and downs of the past year.

2021: A Light at the End of the Tunnel

Following the unprecedented challenges of 2020, this year saw a steady return of in-person events and the rollout of Covid-19 vaccines. Several people and industries started to see a much-anticipated comeback and recovery in the beginning of 2021.

There were certainly still some challenges for franchisors especially on the retail and restaurant side. This included geographic limitations, where certain areas were still heavily locked down and others weren’t, forcing some restaurants to operate without full indoor dining and some retail stores to operate with restricted capacity.

As the year progressed, more people became comfortable with traveling and spent more money at businesses. It also made it more challenging for businesses in certain industries to satisfy this pent-up demand successfully due to complicated in-person requirements. Additionally, business owners have had to adapt their operations to combat the ongoing labor shortage, resulting staffing issues, supply chain interruptions and product shipment delays.

Much has changed for the foreseeable future, there’s no doubt. That said, in 2021 franchise brands have continued to rise above the challenges and seen growth in their systems overall.

2022: An Opportunity for Franchising to Emerge Stronger Than Ever

2022 will likely be a tremendous year for the franchise industry as a whole with a majority of individual brands set to prosper both in terms of system wide sales and franchise development. Many franchisors have been reporting increased sales in 2021, and there is no reason to believe that trend is going to change in 2022. Additionally, the International Franchise Association predicts franchise development is also on the rise with 26,000 franchised locations expected to be added in 2021 and franchise employment projected to grow by more than 10% to nearly 8.3 million workers.

The sector that is positioned better than any other is home services. With more people spending increased time at home and saving money on travel, the demand for home services and home improvement has skyrocketed since the start of the pandemic. As a result, more and more savvy entrepreneurs are recognizing the uniquely lucrative opportunity to enter the home services space.

Some of the other trends that will likely continue in the franchise industry include prospects investing in concepts sight-unseen. Candidates are more comfortable now meeting online than ever before, and development teams have learned how to adapt and appeal to a prospect’s comfort level.

Technology, of course, has also brought on several changes to the industry. Whether it was Zoom meetings, curbside pickup or QR codes, these new digital tools have helped businesses get by and drastically changed the landscape of the industry. These will all continue to be a huge trend in 2022 as brands adapt to challenges including the evolving workforce and supply chain issues.

Overall, it has been a long and difficult time, but the franchise industry has made it through to the other side. Now, as more and more people look to take control of their destiny through entrepreneurship and customers return to their pre-pandemic habits, it is an incredibly exciting time to be a part of the franchise industry.

I am Steve Beagelman, Founder and CEO of SMB Franchise Advisors. In 1991 I co-founded Black Tie Express, a multi-restaurant delivery service.

Source: The Year In Franchising: Reflecting On 2021, And Anticipating 2022

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How To Deal With Work Stress and Actually Recover From Burnout

CREDIT: MALTE MUELLER / ALAMY STOCK PHOTO

Mindfulness, detachment, selecting off-time activities with care: Here are evidence-based strategies to achieve healthy work-life balance. There’s job stress, and then there’s the crushing pressure paramedics went through during the first wave of the Covid-19 pandemic. The uncertainty, the dread, the constantly changing protocols, the shortages of personal protective equipment, the multiple calls to the same nursing home — it was almost too much for Kate Bergen of Manahawkin, New Jersey.

“It felt like everything was closing in around us,” Bergen says. “At some point I knew that I couldn’t take any more. Was I headed for a meltdown? Was I going to just walk off the job one day? I was getting very close to that point.”

Instead of quitting, Bergen found a calling. One day while waiting for the next emergency call, she took a picture of herself in her full PPE. The image inspired her to paint a self-portrait poster in the style of World War II icon Rosie the Riveter. The message: “We need you to stay home.”

It was the first in a series of “Rosie” posters of women first responders, an ongoing project that has helped Bergen calm her mind during her downtime. Ultimately, she says, the Rosies helped her withstand the stress of her job and allowed her to show up to work each day with new energy and focus. “They made it possible for me to keep going.”

Also Read: https://fingerprintforsuccess.com/

While workers like Bergen are responding to emergency calls and saving lives, many of us are doing things like responding to emails and saving receipts from business trips. But even for people with jobs in offices, restaurants and factories, there’s an art and a science to making the most of downtime, says Sabine Sonnentag, a psychologist at the University of Mannheim in Germany. The right approach to non-work time can help prevent burnout, improve health and generally make life more livable.

“When a job is stressful, recovery is needed,” says Sonnentag, who cowrote an article exploring the psychology of downtime in the 2021 issue of the Annual Review of Organizational Psychology and Organizational Behavior.

Workers everywhere are feeling frazzled, overwhelmed and ready for the weekend. With that backdrop, researchers are doing work of their own to better understand the potential benefits of recovery and the best ways to unwind. “Work recovery has become part of the national conversation on well-being,” says Andrew Bennett, a social scientist at Old Dominion University in Norfolk, Virginia. “There’s a growing awareness that we can’t just keep working ourselves to death.”

At a time when many people are rethinking their jobs (if they haven’t already quit), they should also be thinking about their quality of life away from work, Sonnentag says. “People should ask themselves, how much free time do I have and how much energy do I have for my free time? How do I want to continue my life?”

A weekend paradox

We can all use a chance to unplug and unwind, but here’s the rub: Recovery from work tends to be the most difficult and elusive for those who need it most. “We call it the ‘recovery paradox,’” Sonnentag says. “The odds are high that when a job is stressful, it’s difficult to have an excellent recovery.”

That paradox was underscored in a 2021 analysis that combined results from 198 separate studies of employees at work and at home. Workers with the most mentally and emotionally draining jobs were also the least likely to feel rested and rejuvenated during their off time. Interestingly, people with physically demanding jobs — construction workers, furniture movers and the like — had much less trouble winding down. The surest way to feel lousy after hours, it appears, is to think too hard at work.

Sonnentag authored a 2018 study published in Research in Organization Behavior that helped to explain why the paradox is so hard to escape. People who were more stressed out at work tended to get less exercise and worse sleep, an ideal scenario for feeling less than great. In other words, stressful work can disrupt the very fundamentals of healthy living.

To help workers break out of that destructive loop, researchers are pondering both sides of the work/life cycle. As Sonnentag explains, certain tasks, obligations and workplace cultures make it especially hard to unwind when work is done. Time pressure, the feeling that one is constantly under the gun, is especially disruptive. Jobs in health care, where that time pressure often combines with life-and-death stakes, tend to be especially taxing. Working with customers can be exhausting too, Sonnentag says, partly because it takes a lot of focus and effort to act cheerful and friendly when you don’t always feel that way deep down, a task known as emotional labor.

The demands of work vary widely from one person to the next, and so do approaches to downtime. Recovery is highly individual, and different people will have different strategies. “We don’t have a single prescription,” Bennett says. Researchers have grouped approaches into broad categories, including “relaxation” and “mastery.” Relaxation, a concept that’s easier to grasp than it is to achieve, includes any activity that calms the body and mind, whether it’s walking through a park, reading a good book or watching a zombie hunter movie on Netflix. (Note: The latter may not be an ideal choice if your actual job involves hunting zombies.)

Mastery, meanwhile, can be achieved through any activity that challenges a person to be good (or at least passable) at a new skill. Just as painting helped Bergen cope with stress, workers can find relief in their accomplishments. “Anything associated with learning can be helpful,” Sonnentag says. “It could be some kind of sport or exercise. It can be something like learning a new language or trying new cuisines when cooking.” A 2019 study that followed 183 employees over 10 workdays found that people who achieved some sort of mastery during their off time were more energetic and enthusiastic the next morning.

For people who need a break, the “why” behind a particular activity can be as important as the “what.” A 2013 study that followed 74 workers for five days found that people who spent their off time with activities and tasks that they actually wanted to do — whatever they were — were more lively and energetic the next day than those who felt obligated or forced to do something.

Whether they’re relaxing or creating during their time away from the office, Bennett says stressed-out workers should strive to think about something other than their jobs, a process that psychologists call detachment. (The TV show Severance takes this concept to extremes.) It’s OK to have great ideas in the shower and regale your partner with office anecdotes, but research shows people with stressful jobs tend to be happier and healthier if they can achieve some mental and emotional distance from work.

The benefits of tuning out became clear in a 2018 report involving more than 26,000 employees in various lines of work, including judges, teachers, nurses and office workers. The analysis, coauthored by Bennett, found that detachment was a powerful buffer against work-related fatigue. Workers who said they were able to think about things other than work while at home were less worn out than their colleagues. On the other hand, workers who carried on-the-job thoughts throughout the day were more likely to feel exhausted.

Vacations can also help erase work stress and prevent burnout, to a point. Sonnentag coauthored a 2011 study that used questionnaires to track 131 teachers before and after vacations. The teachers returned to work feeling refreshed and engaged, but those benefits tended to fade after only a month. The post-vacation high was more fleeting for teachers with especially demanding jobs, but it lingered a bit longer for those who managed to fit relaxing leisure activities into their regular routine.

How much vacation is enough? That question is hard to answer, Sonnentag says. While many European workers expect and demand four- or five-week breaks, she says there’s no evidence that such long vacations offer any more chance for recovery than a vacation of one or two weeks. She does feel confident saying that most workers will need at least occasional breaks that are longer than just a weekend, especially if that weekend is largely eaten up by household chores and other non-work obligations.

Perhaps an extra day off each week would make a big difference. That’s the premise driving an ongoing four-day-workweek experiment involving 70 companies in the UK. The businesses, including banks, robotics manufacturers, and a fish and chips restaurant, are all expecting employees to maintain their productivity despite working one day less each week.

The full results won’t be available until 2023, but early data suggest that the four-day workweek has decreased signs of burnout and stress while improving life satisfaction and feelings of work-life balance, reports Wen Fan, a sociologist at Boston College who is helping to conduct the experiment. “The results are very encouraging,” she says.

Fan says it’s too early to know if the employees and companies were able to stay as productive as ever during the experiment, but she notes that most jobs could be done more efficiently with a little extra planning and streamlining. “A lot of time is wasted on distractions and meetings that go on too long,” she says.

No matter how many days a week a person has to work, minibreaks during the day can help, too. A 2020 survey-based study involving 172 workers in the US found that subjects tended to be in better moods and were less emotionally exhausted toward the end of the workday if they had breaks that allowed them to briefly detach from work. The study also tracked mindfulness, the degree to which people are conscious of their present emotions and circumstances.

They did this by asking the participants how much they agreed with statements such as “Today at work I was aware of different emotions that rose within me.” Employees who were the most mindful were also the most likely to truly check out and relax during their breaks from work.

A 2021 study of college students took a closer look at relaxation and exercise during work breaks. Those who tried progressive muscle relaxation, a low-stress activity that involves tensing and releasing muscles, reported more detachment during the break, while students who got their blood pumping on an exercise bike had more energy for the rest of their day.

Study coauthor Jennifer Ragsdale, now a research psychologist at the National Institute for Occupational Safety and Health in Cincinnati, says that a better appreciation for the nuance of work breaks can help people choose the right approach for a given day. “If you need some sort of pick-me-up, you can walk round the building to get your energy going,” she says. “If you’re feeling overwhelmed, you can relax.”

As many people have discovered during the pandemic years, it can be challenging to fully check out from work when your living room is also your office. Speaking with at-home workers, Bennett has collected tips for separating work life and life life. Something as simple as wearing a collared shirt or other office attire during work hours and changing into casual wear at the end of the day can help establish boundaries, he says. Using a dedicated laptop for work and putting any work-related materials out of sight at the end of the day can also create much-needed distance.

Ragsdale says that technology can be both an escape and a tether. The same devices that help us play games, listen to podcasts or struggle with online word puzzles also make it possible to receive work emails and other reminders of life outside of the home. Ragsdale cowrote a 2021 commentary calling for more research into the impacts of cell phones on work recovery. “When you’re continuing to be exposed to work through your cell phone, it’s harder for that recovery process to unfold,” she says. The very sight of a work email can trigger thoughts that are just as stressful as the actual job, she adds.

Not many people can completely let go of their phones when they’re at home, but they can take steps to protect themselves from intrusive work pings. “You can adjust your settings in a way that make your phone less appealing,” she says, including turning off notifications for things like email and Twitter.

Bergen can’t be away from her phone when she’s on call, but she can still feel like she’s in her own world when she’s working on a new “Rosie” painting. Psychologists may call it mastery, but for her it’s a validation and an escape. She has recently started painting women first responders who were on duty for both 9/11 and Covid. “I started out painting one thing for myself and it blossomed,” she says. “It’s turned into something beautiful.”

Source: How to deal with work stress — and actually recover from burnout

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German Industry Braces For Tougher 2022 Due To War, Lockdowns

German industry is bracing for a tougher 2022 as lockdowns in China and the war in Ukraine compound ongoing supply chain problems, leading two associations to downgrade their forecasts for the year.

The VDMA engineering association cut its machinery production growth outlook for a second time on Monday. It now expects production of industrial machinery carrying the “Made in Germany” label to grow 1% this year, having already slashed its forecast to 4% from 7% two months ago.

Last year, production grew by 6.4%. The BDI industry association said it now expects exports to grow by only 2.5% this year, after predicting a rise of 4% in January. read more

The lowered forecasts come despite many companies having strong backlogs of orders, as they are struggling to fill them: A survey by the Ifo institute said 77.2% of companies complained about bottlenecks and problems procuring intermediate products and raw materials.

One in two companies affected by material shortages said the China lockdowns made the situation even worse than before, the IFO survey published on Monday showed. VDMA President Karl Haeusgen said in a statement that before Russia’s invasion of Ukraine, 80% of companies described their business prospects in Russia as good or satisfactory. Now, 75% expect it to deteriorate in the next six months or want to abandon it altogether.

“This shows the extent to which the war has changed everything,” Haeusgen said. BDI predicts production will grow by nearly 2% – less than expected before the war began – with the caveat that this forecast depends on supply chain problems easing and Russian gas continuing to flow in.

Exports may also be a concern. Last year, machinery made up a substantial part of the 26.6 billion euros ($28.5 billion) in goods that Germany exported to Russia.

Source: German industry braces for tougher 2022 due to war, lockdowns | Reuters

Critics by Carlos Caceres, Mai Chi Dao, and Aiko Mineshima
IMF European Department 

Germany’s economy contracted by just under 5 percent in 2020, outperforming most European peers. New waves of infections and associated lockdowns during late-2020 to early 2021 hampered the rebound from the first wave. But forward-looking indicators suggest further growth in exports and a brightening outlook for the services sector, in line with re-opening plans and anticipated pent-up demand.

For the year as a whole, growth of about 3.6 percent is expected. The recovery pae

th, however, is beset with risks, particularly regarding the progress of the pandemic and supply shortages in key industries. Retaining supportive fiscal policy until there is clear evidence of a sustained recovery while also using the fiscal space to lift potential growth over the medium term will be crucial. 

The government has extended various COVID-19 measures from 2020, such as grants to firms and an expansion of the short-time work subsidy, while also introducing several new measures to support households and businesses. Maintaining adequate support while the economy is still weak is important to minimize scarring effects. As the recovery firms up, more targeted policies and a focus on facilitating resource re-allocation becomes important.

Over the medium term, it is important that Germany’s fiscal space is used to boost growth potential by investing in physical and human capital, accelerating digitalization, incentivizing innovation, bolstering labor supply, and increasing disposable income for low-income households. Making progress towards these goals would also help with external rebalancing.

A green transition is key to Germany’s recovery program, yet there are opportunities to improve the cost-effectiveness of its climate mitigation measures. Following a constitutional court ruling in May, Germany tightened its greenhouse gas emissions targets aiming for a 65 percent reduction by 2030 and net zero emissions by 2045. Germany could bolster its mitigation program with a better-specified schedule of carbon prices over a longer time horizon, complemented with sector-specific feebates (revenue-neutral tax/subsidy schemes).

Continued government support for green infrastructure and technologies is also essential for the transition and to spur the economic recovery. To mitigate the potential adverse impact of higher carbon prices on households, further relief targeted at lower-income earners can be considered.

Germany’s expanded short-time work subsidy or Kurzarbeit remains important until the recovery takes hold, while groups not covered by Kurzarbeit need to protected by different means. The unprecedented take-up of Kurzarbeit helped keep unemployment in check and supported aggregate demand. However, as the recovery takes hold, normalizing Kurzarbeit parameters becomes essential so as not to inhibit labor reallocation toward growing firms and industries. Job search assistance and appropriate training programs can facilitate workers’ transition into post-pandemic jobs.

For groups not covered by Kurzarbeit, maintaining expanded access to the current basic income program would be beneficial until the job market recovers sustainably. To arrest widening inequality, the government could consider reducing social security contributions on lower incomes, which would also spur hiring and labor supply.

Safeguarding financial stability during the nascent recovery is essential. So far bankruptcies and financial losses have been limited, while bank capital has actually increased since the onset of the pandemic. But bankruptcies may rise as support measures are phased out, warranting continued targeted liquidity and solvency support for viable firms.

Meanwhile, specifying an appropriately gradual timetable for banks to rebuild capital buffers is important to mitigate the risk of curtailed lending when it is most needed. Banks also need to improve their cost structures to address chronic low profitability. Progress has been made in narrowing data gaps that have hampered the full assessment of macro-financial risks. But the buildup of financial vulnerabilities in real estate markets calls for close monitoring and for expanding the macroprudential toolkit to include income-based instruments.

Further reading:

UK inflation expectations stick at high levels – Citi/YouGov, article with imageWorld
WorldNATO’s support for Ukraine is unbreakable, Spain’s PM Sanchez says,
European MarketsRussian rouble rallies past 62 vs dollar, reversing last week’s heavy losses
European MarketsWorld stocks turn positive in May on Fed bets
European MarketsDollar resumes slide as stock markets tentatively pick up
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