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Macroeconomic & Geopolitical

You’re Gonna Need a Bigger Stimulus

16 April 2020 - 3 min read

Worse-than-expected U.S. retail sales suggest a large drop in consumer spending, the IMF projects global growth will fall 3% in 2020, and people around the world are beginning to receive their stimulus checks—and it's already not enough.

Watchlist

Arrows indicate consensus forecast compared to the previous period. Local dates of release.
 

U.S.

  • Initial jobless claims have likely peaked, but the labor market remains a dire situation. Small business loans are being accepted, but many still lack cash and the small-business loan fund is dry. More jobs will be lost without additional funding.

Europe

  • The EU video summit on April 23 will include four COVID-19 initiatives: pan-EU unemployment benefits; the EU Investment Bank’s loan guarantee program; a new ESM credit line for health care; and financing a Recovery Fund. The first two items are considered agreed, while the other two are still controversial.

Asia Pacific

  • The PBOC will likely ease more. The one-year MLF rate drop suggests further reduction in the corporate loan reference rate. Weak inflation data emphasizes demand remains meager, adding pressure for more support from the PBOC.
  • Further fiscal and monetary stimulus measures are expected in Japan, including Prime Minister Shinzo Abe’s plan to give $1,000 to every person. An earlier plan would have restricted payments to struggling households.
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