Last week: The global economy is running on three separate but connected tracks. Some emerging economies, like China and India, have been growing at least twice as fast as the overall global economy. And the latest data from purchasing managers in those countries suggest that strong growth will continue into the spring. Among developed economies, the latest jobs report reflects how fast the U.S. economy is growing. Here, too, purchasing managers are indicating that the current trend will be extended. Other developed economies are growing, but not quite as strongly as the U.S. economy. Germany and France are doing a little better than the rest of the euro-zone. Perhaps that is one reason why they worry more about oil-price shocks. They also worry because a great deal of their energy comes from those areas currently experiencing unrest.

THE SITUATION ABROAD

The economic focus across the globe has shifted a little from economic growth to the inflation potential. The headlines are full of stories about hikes in food and metal prices. Higher energy prices are mentioned as well, even before the upheavals in some of the energy-producing countries. Is inflation really building momentum? The accompanying chart shows that U.S. commodity prices, excluding food and energy, declined sharply as demand fell during the global recession. These prices are now coming back to pre-recession levels. A different question, then, is whether prices are likely to rise in the near term. A separate question is whether higher food and/or energy prices will lead to higher core commodity prices. Perhaps a more important question is whether these higher costs will be passed on to consumers or will goods producers swallow them and watch their margins thin. It is too early to answer these important questions. Still, framing the questions puts the recent increases into perspective, especially if qualms about energy supply calm down.

FACT OF THE WEEK

0.2 to 0.3 percent. Statisticians at Macroadvisers calculate that a $10 jump in the price of a barrel of crude oil could reduce U.S. economic growth by this much on average over the next 12 months. Interestingly, they assume not much change in the underlying rate of inflation. Put another way, the impact would be businesses swallowing the cost increase and not being able to pass them along to consumers. The analysis is timely because prices jumped $7 last week.

QUESTION OF THE WEEK

Last week you said we could run out of water before we run out of energy. Could we run out of space to dispose garbage?

The textbooks say that if someone wants to buy something, it is a good. If no one wants to pay for it, then it’s garbage and someone has to be paid to take it away. To where? Actually, the better question is whether some of what is disposed of can be retrieved, cleaned and reused. Paper, plastic and glass materials are indeed recycled in many places today. More materials may be retrieved for further use tomorrow in many different ways and for multiple uses.

For example, electric plasma torches (so-called artificial lightning) are currently used to destroy sludge from oil refineries. Basically, sludge is burned up, generating carbon monoxide and hydrogen in a mix called syngas.

In turn, this syngas is converted into fuel for electric generation — yes, using a form of electricity to generate electricity but getting rid of garbage (molten slag) in the process. Newer equipment and technology are capable of generating more syngas and less garbage, with ongoing research into ways to increase the former and further reduce the latter. And that means not only reducing waste but especially reducing hazardous waste. And in the process, we can stretch the available space in which to dispose garbage, reducing the probability of running out of space.  Of course, as always, one big question is cost, and whether or not that cost is financially viable, even if technically achievable.