GDP data for Q2 revealed sharp declines in activity in all major economies except China, driven primarily by slumps in consumer spending. Retail sales data for May and June pointed to an encouragingly sharp rebound, leaving sales above their pre-virus levels in the US and the euro-zone. But the improvement was more modest in EMs, where governments have typically done less to support household incomes. What’s more, there are signs that renewed virus outbreaks caused the consumer recovery in advanced economies to stall in July. Note, for example, that Google data imply that visits to retail and recreation sites have stopped rising in recent weeks. Even once virus numbers are brought under control, the pace of recovery will be held back by social distancing and elevated unemployment.
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