The emergence of a new form of capitalism—call it the teflon economy—may be behind these shifts. On one side of the equation, firms are better than ever at dealing with shocks, meaning that markets continue to function even at a time when politics breaks down. On the other side, governments offer their economies unprecedented levels of protection.
Start with supply chains, which have received a number of shocks in recent years. The conventional narrative that they are prone to “failure” is largely wrong. During the pandemic some commodities became a lot more expensive—but this was a consequence of an enormous surge in demand, rather than falling supply. Semiconductors are a classic example. In 2021 chipmakers shipped 1.2trn units, some 15% more than the year before. The industry did not really suffer a “supply crunch”. Rather, it responded efficiently to an extreme surge in demand.
According to the New York Fed’s supply-chain pressure index, bottlenecks have remained in line with the long-run average, even in the face of Mr Trump’s trade war. We find similar results in our analysis of 33,000 commodities that America imported from 1989 to 2024. For each year, we counted the number where imports declined from the previous year by more than 20%, even as the price of those imports rose by more than 20%. This hints at situations where a supply chain genuinely “fails”. We calculate that the failure rate has been trending down over time.
Foreign-policy types talk of an age of unprecedented disorder—and markets barely notice https://t.co/eUWlhOsi7G
— The Economist (@TheEconomist) July 15, 2025