Coffee Table Economics (CTE) with Anchor, written by Casey Sprake, is published periodically and offers a thoughtful mix of research, analysis, and commentary. Covering everything from inflation and central bank dynamics to global market moves and socio-political events, CTE distils the forces shaping the economy into insights that are both accessible and easy to digest – making sense of the complex so you do not have to.
Executive summary
In this week’s edition, we highlight the following:
- Washington on pause: Political gridlock meets policy uncertainty. Washington is once again at a standstill – and the economic stakes are rising. As the US government enters another shutdown and the Supreme Court opens a politically charged new term, investors are navigating a landscape defined by gridlock, uncertainty, and delay. With critical data releases suspended and the US Federal Reserve’s (Fed) policy path clouded by missing signals, markets are left watching Washington for direction.
- The world’s inflation hangover: Why cumulative inflation still matters. Since 2020, prices across the globe have risen sharply and remained elevated, redefining what “normal” means for households, businesses, and policymakers alike. From Argentina’s extraordinary 2,000%-plus surge to sustained 20%–40% increases across the US and Europe, the cumulative impact of past inflation continues to shape global economic realities.
- SA’s manufacturing pulse rebounds – yet confidence falters. The Absa Manufacturing Purchasing Managers’ Index (PMI) climbed back into expansionary territory in September, supported by stronger domestic demand and rising production activity. Yet beneath the surface, employment continues to contract, input costs are climbing, and business confidence has taken a sharp knock. The sector’s rebound offers a glimmer of resilience- but not yet the foundation for sustained growth.
Washington on pause: Political gridlock meets policy uncertainty
This week (starting 6 October) has once again begun with Washington at the centre of global attention. Not for what it is doing per se, but more for what it isn’t. As the US government grinds to a halt and the Supreme Court opens one of its most politically charged terms in decades, investors are left navigating a landscape dominated by policy paralysis, institutional tension, and delayed economic data. With few major data releases scheduled and the flow of official statistics now interrupted by the shutdown, markets are turning their focus to Washington’s power centres (the White House, Congress, the Fed, and the Supreme Court) all of which are playing a critical role in shaping sentiment and the outlook for growth, rates, and risk assets in the months ahead.
In an already quiet week for economic data, the US government shutdown has further delayed the release of several key indicators. The closure (the first since the 35-day shutdown of 2018–2019 during current US President Donald Trump’s first presidency) follows Congress’s failure to reach an agreement on a seven-week spending package. At the heart of the stalemate is a dispute over healthcare funding. Democrats have refused to support a short-term bill unless Republicans agree to extend the Affordable Care Act (ACA, nicknamed Obamacare) tax subsidies through the end of the year and reverse Medicaid cuts included in Trump’s One Big Beautiful Bill Act. The economic fallout is immediate and tangible. Around 800,000 federal workers face furloughs, and the White House has threatened permanent dismissals.
Beyond the human cost, the shutdown introduces new uncertainty for monetary policymakers. With the Bureau of Labor Statistics and Census Bureau shuttered, critical data (including this Friday’s non-farm payrolls report and next month’s CPI release) will be delayed. This means the Fed will be deprived of vital inputs just as it weighs how quickly to transition from its restrictive stance to rate cuts in 2025. A prolonged data blackout could complicate the Fed’s decision-making, leaving markets guessing about the trajectory of both inflation and growth. While essential services will continue, from air traffic control to postal delivery and law enforcement, other parts of the US economy will visibly slow. National parks, museums, and administrative offices will essentially shut their doors, while airport delays and backlogs in processing are expected to rise. For now, the only certainty is more uncertainty.
The one major release that will go ahead as planned is the Federal Open Market Committee (FOMC) minutes, due on Wednesday evening (8 October). Investors will be parsing every line for clues on the internal debate within the Fed — particularly whether members are aligning behind a more dovish bias or maintaining a cautious stance amid still-sticky inflation. However, given the Fed’s strict data-dependent framework and the absence of fresh economic releases due to the shutdown, the minutes may offer little immediate insight into the path of future rate cuts. Nonetheless, the tone will matter: any hint of disagreement among senior officials could sway expectations and, in turn, Treasury yields and the US dollar.
Meanwhile, the US Supreme Court begins a new term this week — one that could have far-reaching implications for governance, markets, and investor confidence. Trump entered his second term from a position of legal and political strength, having won nearly all of his 30 emergency appeals to lift lower-court injunctions. However, this term will see the conservative supermajority directly confront several of his most controversial actions.
- November: The justices will assess the legality of Trump’s sweeping tariff measures, which have defined much of his trade policy and reshaped global supply chains. A ruling could influence both corporate investment planning and future trade dynamics.
- December: The Court will revisit a 90-year-old precedent protecting the independence of regulatory agencies. This case could expand presidential power over the heads of institutions like the Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), and the Fed.
- January 2026: The Court is set to hear Trump’s attempt to replace Lisa Cook, who serves on the Federal Reserve Board of Governors, a move that strikes at the heart of central bank independence — a cornerstone of market stability.
- Ongoing: Perhaps the most incendiary case involves Trump’s bid to abolish birthright citizenship, which critics argue violates the 14th Amendment. Beyond the constitutional stakes, such a ruling could have social and demographic implications, reigniting debates around labour markets, immigration, and fiscal policy.
Also on the docket are cases touching on conversion therapy for minors, racial gerrymandering, campaign-finance limits, the death penalty, and police searches- each carrying the potential to reshape legal and regulatory frameworks in ways that influence both the social and economic environment. The interplay between a government shutdown, a cautious Fed, and a politically charged Supreme Court underscores a broader narrative: institutional friction is now a key macroeconomic variable.
The bottom line
Even in a data-light week, the US offers no shortage of moving parts. Political deadlock in Congress, legal showdowns at the Supreme Court, and cautious deliberations at the Fed together form a potent mix of policy risk and market uncertainty. For investors, it is another reminder that Washington, as much as Wall Street, remains the dominant driver of the global economic narrative.
The world’s inflation hangover: Why cumulative inflation still matters
Even as headline inflation rates cool across much of the world, the reality for households and businesses is that the price shock of the past few years has not gone away – it has merely stopped getting worse. Since 2020, global prices have climbed dramatically, and while monthly readings may now look benign, those earlier surges remain baked into the cost of living. When economists talk about cumulative inflation, they refer to the total increase in prices over a multi-year period, rather than the pace of change in a single year. It captures how much the purchasing power of money has eroded since a specific point in time – in this case, the pre-COVID-19 pandemic year of 2020. This measure is crucial because inflation does not reset to zero once it slows. A year of 10% inflation followed by another 10% does not mean prices fall back – they rise again, compounding the previous year’s increase. In other words, disinflation (falling inflation rates) is not the same as deflation (falling prices). That distinction helps explain why consumers across the world still feel squeezed, even as central banks declare progress in bringing inflation under control.
The global COVID-19 pandemic, supply chain shocks, and geopolitical conflicts have left vastly different inflation legacies across regions. According to data from Deutsche Bank, as of June 2025, in Argentina, cumulative inflation since 2020 has soared by an extraordinary 2,164%, the by-product of serial debt defaults, money printing, and years of policy instability. The economy’s reliance on central-bank financing to cover fiscal shortfalls triggered a near-total loss of currency credibility, leaving Argentine households battling hyperinflation and repeated devaluations.
Elsewhere, other emerging markets (EMs) have also faced severe price erosion. Türkiye’s prices have risen 464%, driven by unorthodox monetary policy, aggressive rate cuts in the face of high inflation, and a chronically weak lira. Egypt, too, has seen prices more than double (116%), reflecting currency devaluation and imported inflation through higher food and fuel costs.
Across Europe, cumulative inflation tells a different story but with similar pain. Hungary (52%), Poland (42%), Russia (44%), and Czechia (39%) have experienced some of the steepest price rises on the continent. Much of this was fuelled by the energy shock following Russia’s invasion of Ukraine, which sent gas and electricity costs soaring through 2022–2023. By contrast, Switzerland, insulated by a strong franc and tight monetary discipline, recorded just 6% cumulative inflation, and even slipped into mild deflation earlier this year – prompting the Swiss National Bank to cut rates to 0%.
In the UK, prices have risen 24% since 2020- notably a softer increase than in Eastern Europe but still sharply above historical norms. Germany (22%) and the US (23%) have faced similar trajectories, highlighting how advanced economies also grappled with sustained price increases, even after inflation peaks receded. In the US, electricity prices have climbed at more than twice the overall inflation rate, and beef prices are up 16% YoY, underscoring how specific components of the consumer basket remain stubbornly elevated. Across Asia, price pressures have been comparatively muted. Japan, long accustomed to ultra-low inflation, has seen cumulative price increases of just 8% over five years. Nonetheless, for a society long-accustomed to near-zero inflation, even that represents a notable shift in consumer behaviour and wage expectations.
Cumulative inflation has broad and lasting economic consequences. For consumers, it erodes real purchasing power and living standards, even if wages eventually catch up. Households continue to face “price fatigue,” where everyday goods cost permanently more, squeezing discretionary spending and confidence. For central banks, the persistence of elevated prices means policy normalisation will be gradual. Even as interest rates begin to ease in 2025, the inflationary scars of the pandemic era have altered how policymakers think about price stability. In advanced economies, the challenge is no longer runaway inflation but rather the stickiness of prices in key sectors such as housing, energy, and food- categories that are notably less responsive to interest-rate changes. For EMs, the story is more acute. Cumulative inflation often reflects structural fragilities: weak currencies, fiscal imbalances, and credibility deficits in monetary policy. These pressures translate into higher borrowing costs, slower investment, and greater social unrest – a cycle that is difficult to break without restoring macroeconomic discipline and policy coherence. Globally, the legacy of high cumulative inflation also complicates the path for trade and competitiveness. Countries that have managed to anchor prices (such as Switzerland, Japan, or China) now face real exchange-rate appreciation. In contrast, those with higher inflation, such as Argentina or Türkiye, struggle to attract capital and stabilise their currencies.
The bottom line
Inflation may be falling, but its aftereffects linger. Cumulative inflation since 2020 has reshaped global price levels, household behaviour, and policy frameworks alike. The world is no longer dealing with an inflation spike but an inflation plateau– one that has quietly redefined what “normal prices” mean across economies. Understanding cumulative inflation reminds us that even as the headlines fade, the cost of the last few years remains very much part of everyday life- built into the price of every loaf of bread, kilowatt-hour of electricity, and litre of petrol around the world.
SA’s manufacturing pulse rebounds – yet confidence falters
SA’s manufacturing sector ended 3Q25 on a firmer footing, with the seasonally adjusted Absa PMI rising by 2.7 points to 52.2 in September, returning to expansionary territory for only the second time in 2025. This marks a welcome rebound after a volatile year, lifting the average PMI for 3Q25 to 50.8, well above the 45.4 and 46.2 recorded in the first two quarters of 2025. The latest reading suggests that manufacturing activity has started to regain some traction heading into year-end, although the recovery remains uneven and fragile. The improvement in business activity was particularly striking, with the sub-index jumping by over 12 points to 57.9 – its first expansion since October 2024. New sales orders also showed strong momentum, climbing to 56.1 in September after a sharp dip in August, supported primarily by a rebound in domestic demand. Global demand, by contrast, remains under pressure amid ongoing US tariff measures and a challenging trade environment, which continue to weigh on SA’s export competitiveness.
Encouragingly, the domestic market seems to be doing some of the heavy lifting for now. Still, the recovery is being held back by logistical and infrastructure bottlenecks, with the PMI supplier deliveries index ticking up slightly to 54.8, reflecting slower delivery times and lingering inefficiencies at ports. Despite these pockets of improvement, the picture on the employment front remains concerning. The employment sub-index dropped sharply to 42.8 in September, marking the eighteenth consecutive month of contraction. Manufacturers are clearly still hesitant to expand their workforce after an extended period of subdued demand and rising labour costs. Stats SA’s recent Quarterly Employment Statistics (QES) survey, which showed a loss of 9,000 manufacturing jobs in 2Q25, reinforces the view that the sector is yet to see a meaningful turnaround in employment conditions.
At the same time, input cost pressures are creeping higher. The manufacturing purchasing price index rose by 3.3 points to 61.7 in September (its highest level in five months) despite a stronger rand and lower fuel prices at the start of the month. Respondents cited higher raw material and labour costs, as well as ongoing operational inefficiencies, as key contributors. This persistence in input cost inflation, even as broader price pressures have started to moderate, could make it harder for manufacturers to rebuild margins or pass savings on to consumers. What is perhaps most concerning, though, is that sentiment has turned sharply negative. The index measuring expected business conditions six months ahead fell from 56.8 in August to 49.2 in September – slipping below the neutral 50 mark for only the second time in nearly two years. This reversal suggests that firms remain cautious about the months ahead, likely reflecting uncertainty over global trade policy, ongoing cost pressures, and doubts about the durability of local demand.
The bottom line
Taken together, September’s PMI paints a nuanced picture. The rebound in business activity and new orders points to some resilience in the real economy and could support a modest pickup in 3Q25 GDP growth. Yet, the persistent weakness in employment, coupled with rising input costs and waning confidence, highlights just how delicate the recovery remains. The sector may be stabilising, but it is not yet on a firm growth path. From a broader macroeconomic perspective, these data underline a key theme in SA’s recovery story: growth may be returning, but it lacks breadth and momentum. Rising costs and uneven demand are keeping manufacturers on edge, while persistent uncertainty – both at home and abroad – continues to cloud the outlook. For now, the manufacturing sector is moving in the right direction, but the path forward remains narrow and uncertain.
