The writer is professor of finance at the University of Chicago’s Booth School of Business

A perfect economic storm engulfs industrial countries. Even before the pandemic, US-Chinese geopolitical rivalry impeded global trade and cross-border investment. The pandemic skewed demand towards bicycles and away from gym memberships.

Then rolling lockdowns across the world disrupted production of those bicycles. Ordinarily, the rise in prices of bicycles would have quelled demand, but the enormous fiscal and monetary response to the pandemic in advanced economies kept household spending power strong. Even as jobs came back to cater to this demand, workers became harder to find, because older workers decided to retire and immigration slowed. The mix of strong demand and limited supply ignited inflation, which has spread well beyond the narrow set of goods that set it off.