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The Chief Economist’s Note

COVID’s laggards to begin the long process of catch-up next year

Posted by Neil Shearing | Category : The Chief Economist's Note.

The webinars we held last week told a tale of two economies. China was hit early and hard by the virus, but its rebound was swift and it is now the only major economy to have recovered all the output it lost during the crisis. In contrast, the UK economy has languished amongst the global … Continue reading “COVID’s laggards to begin the long process of catch-up next year”

The economic consequences of the second lockdown will be different from the first

Posted by Neil Shearing | Category : The Chief Economist's Note.

The obvious place to start this week’s note is the US election, but at this stage there’s not much to say that’s not already been said. Our US Update published over the weekend provides an excellent summary of the key points and the implications for the economy and policy, and our markets team have sketched … Continue reading “The economic consequences of the second lockdown will be different from the first”

Fate of the markets lies with the Fed more than the White House

Posted by Neil Shearing | Category : The Chief Economist's Note.

In more normal times investors would have spent last week digesting opinion polls and poring over the closing statements from the candidates to be the next US president. Instead, the pandemic remained centre stage as concerns over rising infection rates and renewed restrictions on activity sent markets into a tailspin. The election was supposed to … Continue reading “Fate of the markets lies with the Fed more than the White House”

Policymakers must stay the course as recoveries flag

Posted by Neil Shearing | Category : The Chief Economist's Note.

Economies still need help amid signs they are struggling to regain pre-virus growth paths Economic rebounds have, until now, been about as V-shaped as we might reasonably have hoped for. But data released over the past couple of weeks suggest that the pace of recovery in several countries is now starting to lose steam.  This … Continue reading “Policymakers must stay the course as recoveries flag”

The thin edge of the inflationary wedge

Posted by Neil Shearing | Category : The Chief Economist's Note.

If prices eventually start rising, debt-laden governments may be tempted to embrace them One of the questions we get asked most frequently is whether the pandemic will usher in a period of higher inflation. There are several angles to this. One is whether supply restrictions caused by social distancing measures will push up prices. Another … Continue reading “The thin edge of the inflationary wedge”

What past pandemics can – and can’t – teach about COVID’s economic legacy

Posted by Neil Shearing | Category : The Chief Economist's Note.

A few weeks ago, I argued that the pandemic was a good illustration of Keynes’ principle of “fundamental uncertainty” – an event that radically alters the economic outlook but is impossible to anticipate before it occurs. In such circumstances, it is tempting to reach for the history books to help chart the course ahead.  Economic … Continue reading “What past pandemics can – and can’t – teach about COVID’s economic legacy”

How COVID-19 has stopped the march of globalisation

Posted by Neil Shearing | Category : The Chief Economist's Note.

The focus over the past week has been on the continued rise in infections in Europe, and the economic consequences of new restrictions that have been imposed in several countries, including the UK. (For more, see here.)  However, it is also useful to take a step back from the day-to-day ebb and flow of the … Continue reading “How COVID-19 has stopped the march of globalisation”

China’s rebound has failed to lift others

Posted by Neil Shearing | Category : The Chief Economist's Note.

One important point that gets missed in the debate over the likely shape of the post-virus recovery is that different economies are already rebounding at different speeds. According to the official data, at least, China is leading the way. This raises three questions: can we trust the official data, is the recovery in China sustainable … Continue reading “China’s rebound has failed to lift others”