Now the world has to cope with inflation, labor shortages and geopolitical unrest.
Central banks that ignored the first embers shifted forcefully into firefighting last year, unleashing the fastest, most synchronized tightening of monetary policy in two generations.
At the start of 2022, the yield on the 10-year benchmark US government bond was around 1.5%, and the market was expecting the federal fund rates to stay below 1%.
Instead it ended the year above 4%, with 10-year yields expected to be not far short of that level throughout 2023.
Is it possible for economies to continue to grow while interest rates and joblessness are going up and both real incomes and house prices are going down?
We are about to find out.
Stephanie Flanders Bloomberg 12 january 2023