Wide ranges

Posted by: Paul Donovan

16 Jun 2020

Daily update

  • US May retail sales give evidence of the economic bounceback. Fear of unemployment and the virus should be sufficiently controlled to allow growth. However, there is uncertainty about how consumers will react, so you could drive a family fleet of SUVs through the forecast range (2.8% m/m to 11.5% m/m).
  • The German ZEW opinion poll of economic expectations surveys economists – and economists' views should always be respected. However, traditional economic models do not really apply in the current cycle, which gives the potential for a wide range of views.
  • The US administration is considering a USD 1tr fiscal stimulus package. Most fiscal spending so far has been about a scramble to set up a temporary, European-style social safety net. That is more anti-depressant than stimulant. The risk with infrastructure is that it can be backwards looking – more about the second industrial revolution of the 1920s, not the fourth industrial revolution of the 2020s.
  • There was a conference call on the interminably tedious EU-UK divorce process. UK Prime Minister Johnson declared that "oomph" is now needed. "Oomph" means being exciting, energetic or sexually attractive. None of these are adjectives traditionally associated with the interminably tedious EU-UK divorce process. UK labor market data showed relatively low unemployment.

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