Yesterday, central banks and companies in numerous industry verticals announced more bad news about the global economy.
Jay Powell called for further fiscal stimulus to avoid large scale, economic damage. The US government’s early response was good, adding, ‘it was costly but worth it.’ However, he said more needed to be done and he called for further support. $3 trillion has already passed for fiscal stimulus and there is calls for another $3 trillion from congress, but not all sides agree. In the UK, the Chancellor of the Exchequer gave a gloomy speech, announcing that the UK economy had shrunk at its fastest monthly pace since records began (300yrs).
OECD secretary, general speaking to FT yesterday further detailed the consequences of what is happening. He rightly said that the human health consequences needed to be dealt with first. This would make it easier for the recovery and likely less expensive. It is universally anticipated that it will take two years to recover economically from the shock.
One of the largest questions yet to be answered, is just how many furloughed jobs have become ‘zombie jobs’ – they simply won’t exist when the furlough period ends. Look to Travel and Tourism which is undoubtedly going to be the hardest hit. There will be others.
One of the leading indicators we watch carefully at Elevate is the shipping trade and yesterday Maersk warned of a 25% fall in its forecast. Protectionism is also a growing concern (something we will detail further next week).
However, there are always bright spots in a crisis and the food supply chain been remarkably robust during this tumultuous period. It’s valued at 10% of GDP globally – there is opportunity.