Growth recovery versus level recovery

Posted by: Paul Donovan

18 May 2020

Daily update

  • Fed Chair Powell, who is not an economist, gave an interview on economics over the weekend. Full recovery for the US was signalled for 2021. While GDP growth is likely to bounce back in the third quarter (with delayed demand and enforced savings), the level of GDP is not likely to return to where it was in 2019 for some considerable time.
  • Japanese GDP fell 0.9% q/q in the first quarter (there is no point annualizing data in a pandemic). This was "above consensus". As the consensus range was -0.6% to -4.0%, "consensus" is not a very precise term. Some media companies are using the word recession to describe Japan, which is a silly label to use in a pandemic.
  • Oil prices moved a little higher as supply cuts start to take effect, and as lockdowns continue to ease. California's governor reported that three quarters of the economy is open. European economies have had no reason to reverse lockdown easing so far.
  • The Bank of England's Haldane was threatening higher taxes on savers and the financial system, via negative interest rates. The BoE's Tenreyro is speaking today. We also hear from the Fed's Bostic, who is an economist.

Explore more CIO Daily Updates