Can executive orders banish fear?

Posted by: Paul Donovan

10 Aug 2020

Daily update

  • US President Trump signed four executive orders over the weekend, which included an additional USD 400 unemployment benefit and the suspension of the payroll tax. Members of both the Republican and Democrat parties have suggested this is unconstitutional. That uncertainty is very important to the economic impact.
  • If the unemployment benefit is paid (it is not certain), that is obviously a direct help to millions of US citizens. However the bigger economic impact is around fear of unemployment and its consequences. If there is uncertainty about the legality of the President's actions, fear may continue – which will stop the economic benefit.
  • Chinese consumer price inflation was pushed slightly higher by pork and fresh vegetable prices. This is a global pattern – some relative price shifts in a generally low inflation world. The fact that food price inflation is rising faster than overall inflation in most economies is a key reason why consumers have an unrealistically high view of inflation.
  • A UK survey (which most people will never have heard of before) suggested a third of UK firms may fire workers this year. We will get more sensationalist survey headlines around the world in the coming months. Investors would be wise to treat them with considerable caution.

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