The global economy is bouncing back faster than anyone expected, but Southside risks remain and more help from the Fed and other central banks is Key for a full recovery.
The US and many other world economies are recovering from a “very deep shock” and should return to pre-China virus chaos marks within in the next 18 months.
The restart is real.
What is Key is that we have the continuous policy support plus a break in deadlock among US lawmakers on a new round of aid/relief/stimulus.
Employment will take longer to fully recover than GDP. That will not be until Y 2022, which will bring challenges to policy makers
The labor market will experience some continuing problems because of the virus chaos.
However, the recent revisions by the OECD and Fed as hopeful signs.
The Paris-based OECD said last wk the global economy will contract 4.5% in Y 2020, less than the prior forecast of 6%, with forecasts for China, EU and the US all improving.
Central banks prefer that inflation rise above 2%.
Unlike in the Ys 2008-09 financial crisis, with fiscal policy moving with monetary policy, 2% to 3% world inflation is possible to achieve given the circumstances. The economic cold war between the US and China and the fight may add to inflationary pressures.
“Adding to the economic turnaround will be the continual decline of the US Dollar due in part to the pressure arising out of federal deficits. This however will help our exports and obviously cause higher prices for imported goods. More exports result in more domestic employment. Add to this, the return of American businesses to American soil along with favorable tariff agreements, it looks like America will be the old America, re-emerging as the leader in the World economy.Yes, the steps have been put in place for the American worker to be the prime beneficiary, with new job opportunities and lower unemployment. Hopefully, this will come sooner than later if Congress can return to being constructively focused. However, but positive is that the face of the American worker will change from the office to more of the home environment. Homeschooling will also become a recognized way of life along with a high growth in e-commerce/ internet buying. So, the face of education might help stabilize rapidly growing, high costs for a college education along with a stronger need for suburban living. In so doing, perhaps Congress might also come to the reality of the burdensome student loan crisis too. Yes, we are on the right projection course – putting America first instead of being the gift basket for the World to use and abuse.Today, new technologies are quickly appearing, especially in the robotic and health care industries – both sound contributions from the dreadful pandemic crisis,” says economist Bruce WD Barren
Have a healthy weekend, Keep the Faith!