Weekly Indicators for March 8 – 12 at Seeking Alpha
–by New Deal democrat
Weekly Indicators for March 8 – 12 at Seeking Alpha
My Weekly Indicators post is up at Seeking Alpha.
Although rising long term interest rates are likely to have consequences in 2022, 2021 is shaping up to be a blowout year for economic (and hopefully employment) growth, driven by dual huge monetary and fiscal stimuli.
As usual, clicking over and reading should bring you up to the figurative moment, and reward me just a little bit for my efforts.
As usual, I admire your optimism in expecting a transition to robust growth or “a blowout year.” And on the day many of us got the final, tax-free stimulus check (and, more importantly, with increased unemployment benefits now running through the Summer), it fells almost callow to dispute the possibility.
But what we have seen from the previous two stimuli–and what I expect from this one (and know I will be doing)–is that the primary use of it has been to pay down debt (across the board) or save it (where possible).
Assuming tomorrow’s number is in line with expectations, that will be a full year where <i>new</i> unemployment claims exceed the 665K peak of the Lesser Depression, with little chance they turn around before late April.
Domestically, I expect the result to be similar to that of our parents’s generation–a serious hesitation to participate in discretionary spending even if the cash flows appear good.
Won’t be surprised to see strong growth from pent-up demand, but you don’t get the five haircuts you skipped–you get one. And the macro reactions of Time-Warner/HBO and Disney suggest they don’t think people are going back to movies even later this year.
Even restaurants/indoor dining are going to be a slow burn on the rebuild.
All of which suggests that a scenario of two years of ca. 4% growth is much more likely than the GS 8% estimate for this year.
I hope to be wrong–and I certainly hope quarterly growth will be closer to the 3-4% annualised range of Obama years than the 2-3% of the decent Trump years–but it looks as if “pent-up demand” is overstated and spending patterns will contract going forward.