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Bring on more stimulus

Never enough

Less than a week after the US president signed off a $2 trillion stimulus package, two more are being floated. Trump himself has put forward the idea of a further $2 trillion spend on infrastructure and industry lobby groups want a recovery fund to provide more support for the private sector.

The president’s support for infrastructure spending is nothing new – it was part of his election campaign four years ago. In tune with the zeitgeist it is understandable that he is calling for a “decades long awaited infrastructure bill”. A year ago an embryonic infrastructure bill came off the rails, but with the current circumstances there is more likely to be cross-party cooperation.

Separately, “industries that missed out on the latest stimulus bill are already lobbying to ensure they get a piece of the next one”. Every imaginable industry group – estate agents, book shops, recyclers, theatres – want a chunk of cash to soften the economic blow of the tragic Covid-19 pandemic. The sense is that Congress and the administration will be inclined to oblige in both cases. The recent $2 trillion will not last forever and more stimulus is likely to be needed, not just in the States but elsewhere too: Japan yesterday announced another ¥60 trillion (£450 billion) package.  

 

Misleading confidence

On Tuesday’s ecostat agenda there was much about the pre-pandemic era and little that was up to date. Among the numbers that were almost current, UK and US consumer confidence were less gloomy than might have been expected. There were no surprises from the GDP and inflation numbers and investors did not care anyway.

GfK’s index of consumer confidence weakened by two points to -9, a better showing than the forecast -15. It was carried out during the first two-weeks of March, when the coronavirus was headline news but not impacting day-to-day lives. In other words, the next survey will look worse.

The US Conference Board’s confidence index was 12.6 points lower on the month at 120. However, the survey was completed on 19 March, since then the death toll has increased twenty-fold in the States.

 

Plunging PMIs

The first of the month brings the finalised purchasing managers’ index readings for manufacturing. The numbers from the Far East were less dismal than feared. That might not be true of the numbers from Europe and the States.

In Australia the AiG performance of manufacturing index (nine points higher at 5.07) and the Markit PMI (down half a point at 49.7) headed in opposite directions. AiG attributed the improvement to stockpiling of food and toilet paper. Markit blamed the decline on “record falls in output and new orders”. Japan’s Markit manufacturing PMI was in line with forecast at 44.8 and China’s Caixin manufacturing figure was stronger than expected at 50.1.

Sweden’s reading at 43.2 was nine and a half points lower on the month and is typical of the numbers that analysts expect from the rest of Europe. The UK will do well to fall just one point to 47. The prediction for Canada is the most optimistic at 53.3.

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