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Charting the Global Economy: Recession Recovery Is Wildly Uneven – BNN

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The world’s economic recovery is wildly uneven — and that again was on display this week.

U.S. data on the eve of the Thanksgiving holiday offered signs of both strain and strength, while Germany’s resilience was again on display in European PMI numbers — even amid new lockdown measures that have knocked the economy back.

No matter where in the world you are, the economic consequences of the pandemic are falling disproportionately on the young. Though if you could chose where to weather the crisis, a new scorecard suggests New Zealand should be high on the list.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

U.S.

U.S. business activity is powering ahead and housing market remains red hot. The annualized rate of new-home sales has averaged 1 million from August through October, the strongest demand since 2006, and a increase in builder backlogs suggest residential construction will remain robust through at least the end of the year.

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Still, some of the ground looks shaky. Americans’ income declined more than forecast in October, the number of people applying for state unemployment benefits unexpectedly increased in consecutive weeks for the first time since July, and consumer sentiment dipped to a three-month low.

Europe

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European economies are contracting again as the latest coronavirus restrictions take a massive toll on services. The Purchasing Managers Index for the euro area slipped back into contraction in November, as did the U.K. Germany, however, is coping with the latest restrictions relatively well.

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U.K. Chancellor of the Exchequer Rishi Sunak sought to balance more jobs support with controversial spending cuts this week to get control of the government’s pandemic debts. According to Bloomberg Economics, the U.K. will struggle to avoid economic scarring, though the hit will probably be smaller than from previous recessions. That’s in part because of the scale of the policy response.

Asia

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Australian Prime Minister Scott Morrison is trying to break a standoff with China that has stalled delivery of more than US$500 million worth of coal from the world’s biggest exporter as tensions between the two trading partners mount.

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China’s economic recovery stabilized in November, underpinned by solid global demand for exports ahead of the Christmas period and the stock market’s gain to its highest since 2015.

Emerging Markets

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Consumer prices in Latin America’s two largest economies diverged in early November, complicating Brazil’s plans to hold its benchmark interest rate at a record low while suddenly giving Mexico space to cut.

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Bloomberg Economics doesn’t expect Nigeria’s recovery to gain momentum until next year, when the deep oil production cuts agreed in 2020 are eased and the emergence of a vaccine lifts global demand.

World

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In 2019, the U.S.-China trade war blew a hole in global growth, in 2020, the pandemic caused a historic crash, but 2021 could be the year when U.S.-China ties stabilize and a vaccine draws a long-awaited line under the Covid crisis, according to Bloomberg Economics.

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While the people at greatest risk of suffering severe cases of Covid-19 are of retirement age, the economic fallout has been greatest on the young. A look at unemployment rates across Group of Seven economies shows how severely the crisis has hurt 15-24 year olds.

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Bloomberg crunched the numbers to determine the best places to be in the coronavirus era. New Zealand had the highest score. Japan, at No. 2, was the only G-7 country to make the top 10.

–With assistance from Dan Hanson (Economist), Tom Orlik (Economist), Björn van Roye (Economist), Catherine Bosley, Sophie Caronello, Rachel Chang, Eileen Gbagbo, Max de Haldevang, Mario Sergio Lima, Alex Morales, Jason Scott and Kevin Varley.

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Stocks Could Have a Muted Year, Even if the Economy Booms – Barron's

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Welcome to the Roaring ’20s. When the world finally bids good riddance to Covid-19, courtesy of a bevy of novel vaccines, expect Americans to emerge from their lairs with a joie de vivre not seen since the 1920s. That’s marvelous news for the economy, which could use some cheer after a punishing year, and for the many companies that will help keep the good times rolling.

Just don’t expect the party on Main Street to spread to Wall Street, which had a rollicking celebration of its own this past year. As a consequence, stock…

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The economy is ailing again and layoffs are rising, but vaccines offer hope for cure – MarketWatch

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It’s not just the lives of Americans that rest on a quick rollout of coronavirus vaccines, it’s the livelihoods of millions of people who lost their jobs during the pandemic.

Almost every forecast for the U.S. economy predicts a big rebound in growth and employment in 2021, but it sure doesn’t feel that way right now with the coronavirus still spreading like wildfire.

The last few weeks alone have shown weaker hiring, rising layoffs, and declining consumer spending, all of which point to a faltering economy.

Many businesses have closed, cut their operating hours and laid off workers, leaving some 10 million Americans who had jobs before the pandemic still out of work.

Also: The U.S. lost 140,000 jobs in December. How bad was it?

The bad news hasn’t stopped investors from piling more money into the stock market, however. They are also betting on a big rebound in the economy this year and next.

What they are watching most is the speed at which the vaccines are administered, how rapidly the pandemic recedes and what steps new President Joe Biden will take to boost the economy until the crisis passes.

Read: Consumer inflation increases in December on higher gas prices

Does that render moot the next month or two of economic data, the stuff that usually moves markets. Not all all.

These reports will tell us how much ground the economy has lost in the past few months, how much ground it has to make up —- and whether the hoped-for snapback in the economy is actually underway.

“Do the data over the next few months matter? They certainly do,” said Richard Moody, chief economist at Regions Financial.

The key measure to watch is weekly jobless benefit claims, one of the few weekly government reports that’s very sensitive to changes in the health of the economy.

See: MarketWatch Economic Calendar

Jobless claims, a rough measure of layoffs, began to rise again in November just as the latest and biggest wave of coronavirus cases spread across the country. Last week new claims surged to almost 1 million from a pandemic low of 711,000 two and a half months ago.

Read: Jobless claims surge to 5-month high of 965,000

The report is not without its problems. A government watchdog agency found that jobless claims have been inflated during the pandemic.

Read: Jobless claims inflated, GAO finds

Also: Why the inaccurate jobless claims report is still useful to investors

Yet the direction of jobless claims has largely followed the path of the coronavirus cases and the resulting ups and downs in employment.

The latest snapshot on claims will be the most important report next week after the Martin Luther King holiday which closes financial markets on Monday, but most attention next week will be directed toward the inauguration of President-elect Joe Biden on Wednesday.

Read: U.S. budget deficit climbs to $144 billion in December – and more red ink on the way

On Thursday Biden outlined a sweeping new proposal for up to $2 trillion in federal spending that included $1,400 cash payments to households, supplemental unemployment payments, and money for distributing COVID-19 vaccines, among other items, but it’s unclear how much will eventually pass Congress and how long it will take to filter into the broader economy. Stay tuned.

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Stocks Could Have a Muted Year, Even if the Economy Booms – Barron's

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 on


Welcome to the Roaring ’20s. When the world finally bids good riddance to Covid-19, courtesy of a bevy of novel vaccines, expect Americans to emerge from their lairs with a joie de vivre not seen since the 1920s. That’s marvelous news for the economy, which could use some cheer after a punishing year, and for the many companies that will help keep the good times rolling.

Just don’t expect the party on Main Street to spread to Wall Street, which had a rollicking celebration of its own this past year. As a consequence, stock…

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Source link

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