Bounce-back in evidence

Posted by: Paul Donovan

03 Sep 2020

Daily update

  • July Eurozone retail sales data is due. Retail sales should capture the strongest part of the economic bounce-back. Consumers have emerged from the lockdown with money to spend and a desire to spend it. Trade data suggests that they are spending on things, not services. Retail sales may underreport this, given structural shifts in consumption patterns.
  • French President Macron is taking the EU's fiscal fund to part fund a EUR 100bn fiscal stimulus. This is supply side focused, with tax cuts for manufacturers and retraining programs. The objectives sound great but politicians sometimes have a habit of trying to preserve the past rather than embrace the future (per UK Prime Minister Johnson urging people to return to Dickensian office working).
  • US productivity data is due. Productivity is everything economists do not understand about the economy in a single statistic. Given how much economists do not understand about the economy today, this could be a big number –markets will overlook it. Initial jobless claims will attract more attention, as the cost of being unemployed in the US has risen as benefits have fallen.
  • US President Trump intends to rule on US companies' interactions with China on 20 September – the implications of which extend beyond the technology apps involved.

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