Hope is eternal in the US stock market. Usa, as it continues to set new records on all fragile underlying economic fundamentals.
No matter if fitness experts warn of a dark winter of COVID-19 and that the global economic landscape is deteriorating, no matter that with a contested election, the chances of early fiscal stimulus fade and Federal Reserve Chairman Jerome Powell is attending by keeping us warning us that, in the absence of an early recovery, America’s economic recovery will soon falter.
With today’s highest valuations, even with a simple federal reserve currency, U. S. inventory costs are in the process of valuing the U. S. and its allies. But it’s not the first time They only make sense if America. Continue to enjoy a strong V-shaped economic recovery after the worst recession in 90 years. temporarily return to prepandemic grades while moderating the rate of corporate and family bankruptcies.
Similarly, if the economic recovery were weakened or, worse, plunged into a double-falling recession, corporate profits would stagnate and bankruptcy and default rates would rise. inventory market, which turns out that the blue sky will last forever.
Certainly, Pfizer’s announcement this week of a vaccine with an 90% efficacy rate is more than welcome. The same is true of Dr. Fauci’s assessment that such a vaccine could be widely available in the United States as of April. of such an effective vaccine now gives genuine hope that there will be a soft one at the end of this dark COVID-19 tunnel and that economic life can return to general in the United States during the part of next year.
However, we still have five long months to succeed in April next year. Meanwhile, by throwing a dark cloud over america’s recovery, it is not the only one that has been able to do so. But it’s not the first time The recent sharp increase in the rate of national INFECTION with COVID-19. It’s not just that infections happen lately at an accelerated rate. approximately 130,000 cases consistent with the day, double its peak last summer. It is also that these infections are now expanding to more than 60% every 14 days and that at least until January 20, little will be done at the federal point to prevent this exponential rate of increase.
Given the existing trends, it is credible that, as of early December, the infection rate in the United States will be successful in more than 200,000 cases consistent with the day. Even in the absence of a new primary lockdown at the federal level, such accrual rates would in fact cause additional damage to sectors of the economy, such as travel, restaurants, entertainment and retail, that require close contact with the public.
It would be instructive to take a look at the European economy to see what will soon be in store for the American economy. As in the spring, Europe preceded the United States in the latest resurgence of COVID-19. In response, the main European countries, adding France, Germany, Italy and the United Kingdom, have decreased to a greater or lesser degree since the last relaxation of their locks, which allowed their economies to recover, which in turn Instead it leads to a marked deterioration in European economic expansion forecasts, as the European economy is now officially expected to delight in markedly negative expansion in the last quarter of this year.
All of this suggests that the time has not come for the market or policymakers on the US economic landscape to be able to do so. But it’s not the first time It takes at least five months for an effective COVID-19 vaccine to be widely available in the United States and even in the meantime, the US economy will not be able to do so. The U. S. will have to go through a very dark COVID winter at the same time as the global economy stagnates and the favorable effect of CARES’s previous fiscal program on the U. S. economy will have been a long time.
Desmond Lachman is a resident of the American Enterprise Institute. In the past he was Deputy Director of the Policy Review and Development Department of the International Monetary Fund and Head of Emerging Market Economic Strategies at Salomon Smith Barney.
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