With progress comes change.
During a recent virtual briefing, U.S. Fed leaders agreed that making and sustaining progress in containing the virus could bring change to improving economic activity and building consumer confidence.
Domestically speaking, some observations we’ve made in gathering this quarter’s economic snapshot data:
- Early April and May indicators seemed to show the economy was potentially entering stages of convalescence from COVID, but that data has since flattened along with retail sales data. As a result, several economic analysts suggest recovery has stalled.
- Second-quarter GDP was the worst decline ever recorded, falling at an annualized rate of 33%.
- The quarter-end showed unemployment rate improvements, yet the number of unemployed workers continues at a high of approximately 18 million.
- The U.S. equity markets have been strong, reflecting a V-shaped recovery that the overall U.S. economy has, at least so far, not delivered.
In gathering snapshot data on 15 of our key international economies, VRC notes that:
- Bond yields remain low, particularly in the EU and Japan, likely due to an increase in government borrowing being offset by private sector saving surges.
- Slowly but surely, global manufacturing PMIs show renewed growth with some readings reaching very near or just above 50. However, unemployment levels continue to be an area of concern as businesses continue cost-cutting measures seeking growth from continued virus constraints.
- The second-quarter brought a sharp GDP decline in the 19-member Eurozone, at a rate of 40.3%. If a silver lining is to be found in declining economic activity, we can look to suppression of the virus—new infections are coming in at moderate rates in the EU.
- Some learnings could be taken from China as its economy delivers gains after losing nearly all production capabilities. Retail sales and consumer activity remain down, so full recovery is yet to be realized. But, new COVID case numbers are also down in the first country to have met the virus head-on.
Hope springs eternal.
Lately, it seems to acknowledge the calendar year’s downslope inching closer to NYE 2021 is the single most thought of unwavering, absolute optimism we all hold, especially as we all also hope for rapid results to bring the virus under control. We hope for a well-tested and approved vaccine. We are hopeful for continued, responsible turns of the dial toward fully reopened social and business lives. And we continue to be quite hopeful for ‘swoosh’-shaped economic recovery during this second half of 2020.
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