Economy

Economy Will Be 'Supercharged' After Pandemic But There’s One Big Risk, Moody's Says (It’s Not Inflation) – Forbes

Published

4 years ago

February 15, 2021

Topline

As early indicators point to a strong recovery that will create a “supercharged” economy once the coronavirus crisis slows down, Moody’s Analytics chief economist Mark Zandi says that the biggest risk to that recovery isn’t the runaway inflation that has many experts sounding alarm bells but a dangerous surge in asset values.

Key Facts

Rising vaccination rates and falling hospitalizations, plus the fact that herd immunity looks likely by the summer months, are just a few of the “increasingly compelling reasons” to be optimistic about recovery in the months ahead, Zandi wrote in a Monday research note.

In addition, federal stimulus spending is beginning to make its way to households that need assistance, households with excess personal savings and lots of pent-up demand from the pandemic are ready to spend, and business-to-business spending is on the rise too.

Some economists, lawmakers, and market experts are worried that the unprecedented federal stimulus and the surge in consumer spending that follows it will push prices to historic levels, devalue the dollar and destabilize the broader U.S. economy.

Zandi says these concerns about rampant, uncontrollable inflation are “much too premature,” especially since it will be years before the U.S. reaches pre-pandemic employment levels.

Rather, the bigger and more pressing threat to the recovery is ballooning asset prices, he says, pointing to recent surges in the equities market, housing market, bond market, commodities market, and even the cryptocurrency market.

With valuations sky high, these markets could be vulnerable to major corrections and crashes that have the potential to reverberate through the entire economy.

Surprising Fact

The S&P 500 index has soared almost 300% over the past ten years—much in the way it did in the ten years preceding the dot-com crash two decades ago.

Big Number

$2.4 trillion. That’s how much “forced” savings—money that households would have otherwise spent but couldn’t because of pandemic restrictions—analysts from Goldman Sachs estimate will be accumulated by the time the economy returns to normal in the middle of the year. “Whether households spend a modest or large share of these pent-up savings as the economy fully reopens could be the difference between a healthy recovery and overheating,” the analysts wrote in a Monday research note.

Key Background

Zandi isn’t the only expert taking this view. In a January speech at Princeton University, Federal Reserve chair Jerome Powell said he expects to see “a strong wave of exuberant spending” once the pandemic subsides that could push prices higher in the short term, but that he is not concerned about overheating and runaway inflation in the long term. Powell noted that there are still too many Americans seeking employment for wages to rise to unhealthy levels any time soon, and emphasized that with interest rates still at rock-bottom, the Fed has an arsenal of tools at its disposal to address rising inflation if it becomes problematic.

S&P/TSX composite gains almost 100 points, U.S. stock markets also higher

Published

3 days ago

September 13, 2024

Anne Joseph

TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.

The S&P/TSX composite index closed up 93.51 points at 23,568.65.

In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.

The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.

The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.

The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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Economy

Statistics Canada reports wholesale sales higher in July

Published

3 days ago

September 13, 2024

Anne Joseph

OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.

The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.

The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.

The personal and household goods subsector fell 2.5 per cent to $12.1 billion.

In volume terms, overall wholesale sales rose 0.5 per cent in July.

Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.

This report by The Canadian Press was first published Sept. 13, 2024.

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Economy

S&P/TSX composite up more than 150 points, U.S. stock markets mixed

Published

4 days ago

September 12, 2024

Anne Joseph

TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 172.18 points at 23,383.35.

In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.

The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.

The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.

The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

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