Global economy: Rebound signs come with a caveat

Any signs of a global rebound in economic data this month are coming with a constant caveat — that the coronavirus crisis is far from over.

The lurking threat of resurgent outbreaks that could further disrupt activity and endanger growth around the world is a persisting worry for governments and policy makers trying to cushion the blow.

That backdrop was a recurring theme in charts that appeared on Bloomberg this week. Here’s a selection that offer insights into the latest developments in the global economy.

World
Citigroup Inc.’s global economic surprise index surged to a record high this month, surpassing the previous peak hit in 2009.

Global trade surged in June as governments started to reopen their economies from strict lockdowns earlier in the year, according to CPB World Trade Monitor. Even after the 7.6% jump in June, trade was down 12.5% in the second quarter, with the headline index at the lowest since 2014.

U.S. and Canada


The housing market has been a bright spot for America’s economic recovery, and data released this week were no exception. New-home sales in the U.S. surged to the highest since 2006 in July, as record-low borrowing costs and greater interest in suburban markets helped fuel demand.

Inequality in the Midwest is, by some measures, as high or higher than in any other part of the U.S. A 2019 report assembled by several progressive-leaning think tanks shows the region dominates lists of states with the greatest racial inequality in incomes, homeownership and incarceration.

Canada’s economy suffered its worst contraction on record in the second quarter, with gross domestic product plunging by an annualized 38.7% in the first three months through June, adding to an 8.2% drop in the first quarter.

Europe


Bloomberg Economics estimates 4 million U.K. jobs were still supported by the government’s furlough program at the start of August. With the scheme due to end in October, a wave of job losses in the fall remains a persisting danger.

Massive fiscal spending to help companies and households through the coronavirus pandemic has dealt Germany its first budget deficit since 2013. At 3.2%, the shortfall in the first half was also the steepest since the financial crisis a decade ago.

Asia
The almost 8-year-long era of Abenomics is drawing to a close as Japan’s prime minister bows out due to ill health — with the economy back at square one.

Business activity in India picked up slightly in July as a gradual improvement in services and exports showed the economy possibly moved past its worst in the previous quarter.

Emerging Markets

Economic activity fell faster and deeper in emerging markets than in advanced economies as the Covid-19 shock hit, and the recovery is proving slower and shallower. Activity in emerging markets excluding China remained 33% below the pre-virus level at the end of August, according to Bloomberg Economics.

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