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In the depths of the coronavirus crisis, the global economy’s rebound has faded, setting an uncertain finish for the year.
There are many concerns. The upcoming northern winter could trigger another wave of virus as the vaccine wait continues. The bank moratorium on government aid and loan repayment for inexperienced workers is about to expire. Strain The situation between the United States and China may worsen.Until The November presidential election weakens corporate trust.
“We’ve seen the best rebound,” said Joachim Fels, global economic advisor to Pacific Investment Management Co., to Bloomberg Television. “From now on, the momentum is declining a little.”
This sets a delicate balancing act for the government. They have nearly 20 trillion dollars finance The monetary aid of an effort to bring the economy back to normal as possible in a pandemic can point to many successes.
Unemployment in America Fell sharply August and Housing market It was a bright place. Optimists are citing China’s steady recovery as a guide to other countries in the world, and Germany is posting decent industry data. And emerging markets are breathing with the falling dollar.
But it’s not easy to maintain momentum in all of these aspects. Policy makers are likely to need to supplement stimulus at the point where some want to cut instead. And for all the scientific advances in vaccines, they won’t be available sooner or later on the scale necessary to tightly control the virus.
Meanwhile, there is a headwind. In the labor market, for example, government aid has helped drive an initial rebound, which may have been the easy part. Here’s the long slogan of reshaping business, reallocating resources, and retraining workers in industries that are no longer viable. That kind of restructuring can go on. For several hours.
Already this month, some of the world’s most well-known industrial brands have signaled that job cuts are underway.
AP Moller-Maersk A/S overhaul This will affect thousands of the world’s largest container shipping companies. Ford Motor Co. cut About 5% of American salarymen and United Airlines Holdings Inc. To kill 16,000 jobs are falling next month.
There are other signs of concern as well.
In China, where the virus was a few months ago, consumers are reluctant to consume, Bank Bad bad debts surged, recording the worst profit decline for over a decade.
U.S. lawmakers continue to bargain over more fiscal stimulus packages, which may be necessary to sustain the recovery of the world’s largest economy.
Ryan Sweet, head of monetary policy research at Moody’s Analytics, said adding 1.4 million jobs in August was “a big step in the right direction.” But the economy must maintain that pace and “without fiscal stimulus that is difficult to do,” he said.
‘Not looking good’
In Europe, measures of activity are disappearing, and factories are trying to cut costs as weak demand and price cuts pressure profits. Although France and Germany expanded further programs, the UK plans to end the version in October. Millions of jobs danger.
Japanese Prime Minister Shinzo Abe, who announced his resignation for health reasons last month, said at a press conference that “winter is coming,” and warned that the country should wear clothes to contain the virus.
What Bloomberg economists say
“High frequency data showed a sharp rebound in the second quarter, and activity still below pre-virus levels stopped in the third quarter. There is room for more profit. It would be very positive, for example, if the US quarantined the virus like Germany and started working again. You need a vaccine to get back to normal before the virus.”
–Tom Orlik, Chief Economist. Read more here
The stock market is vulnerable to disappointment in economic figures over the coming months, with emergency financial aid being gradually curbed.
“In terms of valuation, we need to look beyond what’s happened this week in the long run,” said Catherine Mann, global chief economist at Citigroup Inc. Consumption, thus business investment and growth in the US economy.”
Covering everything is the continued spread of the virus, spreading around the world.
According to Warwick McKibbin of the Brookings Institution and Australia National University, it will take time to deliver the vaccine to the world at the required scale, even if the vaccine is designed. His model suggests that the virus could cost the global economy about $35 trillion by 2025.
“A lot of people need to be vaccinated before the economic costs go down,” he said.
— With the help of Catherine Bosley, Scott Lanman and Reade Pickert
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