The Economist - USA (2022-01-15)

The Economist January 15th 2022 Finance&economics 61

ducing regions, a small drop in global out­
put is nevertheless likely. To extract urani­
um,  Kazakhstan  uses  a  method  that  in­
volves  pumping  acid  into  the  ground  to
dissolve  the  ore,  recovering  the  solution
and  then  using  chemicals  to  separate  out
the  metal.  Disruptions  to  the  shipping  of
compounds  and  equipment,  because  of
stranded  trains  or  communication  pro­
blems, may have slowed operations. 
Any shortfall may not matter much for
now. Big buyers of uranium, such as China
and France, which are heavy users of nuc­
lear  fuel,  have  several  years’  worth  of  in­
ventories. The most exposed utilities could
borrow  from  foreign  peers  in  case  of  im­
mediate  shortages,  reckons  Toktar  Turbay
of  cru,  a  consultancy.  Most  of  them  buy
nuclear fuel using long­term contracts that
largely  insulate  them  from  short­term
jumps in the spotprice.Allofthiscreatesa
buffer against asqueeze.
Still,  the  eventsinKazakhstan,which
for  decades  wastheworld’s moststable
uranium supplier,mayeventuallyjoltbuy­
ers into guardingagainsttheriskofrelying
too  much  on  asinglesource.Adaymay
come  when  theKazakhgovernmentfalls
or  state  assets come underattack (Kaz­
atomprom,  the country’s sole uranium
producer,  is  75% owned by a sovereign
fund). Some consumersarethereforelook­
ing to diversifytheirsourcesofsupply.As
Kazakhstan is thelowest­costproducerby
far, that will meanpayinga premium.
A rise in overalldemandcouldliftpric­
es  further.  From Belarusto Bangladesh,
many emergingmarketsaregoingnuclear
to  help  them  decarbonise.Chinaisplan­
ning 150 new reactorsinthenext 15 years.
Even in the West,whichhaslongbeenam­
bivalent towardsnuclearenergy,attitudes
could  change.TheEuropeanCommission
plans  to  class  nuclearasgreeninits“tax­
onomy”  for  investors,whichcoulddirect
funds  towardsnewprojects.NuScale,the
first firm seekingtocommercialisesmall,
modular reactorstobeapprovedbyAmer­
ican  regulators,ispreparingtogopublic
(via a merger witha special­purposeacqui­
sition company).
Beyond  thenearterm,supplymaynot
be  able  to  risequicklyenoughtosatisfy
greater  appetiteforthemetal,supporting
prices  further.Newminesareplannedin
Africa and the Americas,buttheyrequirea
price of at least$50­60perpoundofurani­
um to be profitable.Ifa riseindemandof
2%  a  year  betweennowand2030—acon­
servative estimate—istobesatisfied,then
all of those projectswillneedtobeupand
running,  saysTimBerginofCalderwood
Capital, a hedgefund.Thatmaynotbereal­
istic. One suchmine,inCanada,isundera
lake; another involvesfreezingtheground
up  to  400  metresbelowthesurface.The
price  of  fissilefuelmaybecomeincreas­
ingly flammable.n

America’sconsumers

Lifeafterstimmy

A

merica’sfiscal largesseduring the

pandemichasfuellednotjusteconom­

icgrowthbutalsoa livelyhip­hopniche.

Overthepasttwoyearsmusicianshavere­

leasednofewerthan 30 differentsongsre­

ferring to the government’s stimulus

cheques, known as stimmies. “Yeah,

check,I needa stimmy.s­t­i­doublem­y,

tell‘emgimme,”rapsCurtisRoachinone

snappytrack.The videoseemstoconfirm

theworstfearsabouthowthemoneywas

spent. Mr Roach (pictured above) fans

himselfwithdollarbillsandspraysthem

aboutatparties.Buta closerlistenrevealsa

conservativestreakthatwoulddofustyfi­

nancial planners proud. “Generational

wealth,that’swhereit’sat...savea lil’bitfor

therainydaysonyo’back,neverslack.”

ThequestionofhowAmericansspent

and,crucially,savedmoneyoverthepast

twoyearsloomslargeovertheeconomyto­

day.Inspring 2020,when millionslost

theirjobsovernight,a reasonableassump­

tionwasthatpersonalfinanceswouldsuf­

fer.Instead,governmenthandouts,from

thestimmiestomoregenerousunemploy­

mentbenefits,proppedupincomes.More­

over,aspeoplestayedhome,theirspend­

ingfellwellbelownormallevels.

The result was a piggy­bank boom.

Americans have accumulated some

$2.5trninextrasavingscomparedwiththe

pre­covidtrend(seechart1).Higher­than­

expectedincomesaccountfortwo­thirds

ofthestockpile,whilelower­than­expect­

edexpenditures explaintheotherthird,

WASHINGTON,DC

Willhouseholds’pandemicsavingsstashkeeptheeconomyrolling?

Saving grace

United States, excess savings*, $trn

*Gapbetweenactualandexpected savings (based on 2015-19 trend)

†Extrapolation of average pace during 2015-19

Sources:BureauofEconomicAnalysis;

FederalReserve;TheEconomist

1

3.0

2.5

2.0

1.5

1.0

0.5

0

2020 2021

AccumulatedsinceJanuary 2020

2.0

1.8

1.6

1.4

1.2

1.0

0.8

2120181614122010

Monthly income and spending

Spending

Income

Actual

Trend†