Period: 18-23 мая 2020
Main topic. This week the main event took place at the very beginning. A sharp increase (almost 1000 units) of the Dow Jones index against the background of the news that a vaccine against COVID-19 was allegedly developed. In reality, this means that the general public categorically does not want to believe in the reality of serious negative changes and demands by the fall to bring the situation back similar to the end of 2019. Since there is no chance for this, this suggests that in the fall of this year in the main locomotive of the global economy – the United States will begin a serious psychological shock.
Argentina’s GDP in March fell at its worst pace in 11 years:
Japan’s GDP in January-March fell by 0.9% per quarter (after -1.9% at the end of 2019) and 2.0% per year (bottom since the end of 2009).
Capacity utilization in Japan fell to an 8-year low in March. Japan’s service sector activity index in March fell to a minimum since the March 2011 earthquake. Activity in the Japanese economy (Reuters Tankan index) in May is the worst since 2009.
Australia’s leading indicators from Westpac in April fell by 1.5% per month, which has never happened in 60 years of observation; Researchers don’t expect the economy to return to levels before the epidemic earlier than 2022.
The balance of orders in the British industry in May is the weakest since October 1981:
British retail in April collapsed at the worst pace in history – in a month and a year; and in general, and without gasoline:
The same with Britain’s budget deficit in April; public debt grew to almost 100% of GDP:
The mood of the British is darkest since February 2009. Claims for unemployment benefits in Britain in April rose 71 times a month to a record peak, 6 times higher than the peak of 2008/09.
All the inflation indicators of Britain at the bottom since 2016, in particular, the “nuclear” (excluding highly volatile components) inflation index:
As in the eurozone (main inflation index)
And in Japan. Here, for comparison, two tables are given, and the main index and, the second, “nuclear”.
The situation is similar in South Korea and Canada.
Canadian economy loses record jobs in April
Production in the eurozone construction sector in March fell by 15.4% per year – minimum in 8 years and almost the bottom for 24 years. Registration of new cars in the EU in April collapsed 4.2 times a year to a record bottom; in Spain and Italy, the figure decreased by 30-40 times, in France – by 9.
In the United States, as of May 9, over 25 million unemployed were receiving benefits. Primary applications are growing at 2.5 million per week.
The number of new buildings in the United States in April collapsed by 30.2% per month and 29.7% per year to a minimum since February 2015. Building permits collapsed by 20.8% per month and 19.2% per year to a minimum since January 2015.
NAHB U.S. Housing Market Index May Grows slightly Against April, but Stays Far in Recession
Although the regional industrial index of the Federal Reserve Bank of Philadelphia has grown, it has remained deep in the negative zone:
The Central Bank of Turkey cut the rate by another 0.50% to 8.25%, as the Central Bank of Indonesia – by 0.50% to 3.75%. And the Central Bank of India – by 0.4% to a record low of 4.0%. The Central Bank of China did not change anything, as did the Central Bank of Indonesia and Japan – but it launched a program to support small businesses.
Conclusions: The “viral” collapse has ended and it may give the feeling that the way out of the crisis is already close. True, it may slow down due to the beginning of summer, but, nevertheless, the level of consumer optimism has grown significantly (as can be seen from the main topic of the week). Emission programs launched by a number of governments also played a role, however, the basic parameters of the global economy (including unemployment) do not give any reason for such conclusions. Structural problems will also make themselves felt, either as support for small and medium-sized businesses ceases, or as inflation grows; perhaps, both are combined.