The anatomy of a growth scare

the anatomy of a growth scare

Sumary of The anatomy of a growth scare:

  • And four gauges of the recovery—market prices, “high-frequency” activity indicators, hard data and economists’ forecasts—are all giving mixed signals.
  • In March investors sold them off as they took fright at rising inflation, pushing the ten-year Treasury yield up to 1.7%.
  • The growth scare seemed to intensify on July 19th, when the ten-year yield dipped to 1.19%.
  • The S&P 500, America’s main stock index, fell by 1.6%, with smaller companies hit hardest.
  • Our “economic-activity index” for the country, using Google data on visits to workplaces, transit stations and sites of retail and recreation, has dropped by about 5% since peaking in June (and there is little sign of greater mobility from July 19th onwards, when England lifted all domestic covid-19 restrictions).
  • The hardest sort of data—releases from official statistical agencies—do not yet reflect the impact of rising covid-19 infections.
  • Measures of economic “surprise” in activity indicators (ie, a comparison of the published numbers with economists’ forecasts) still look fairly positive, especially in Europe.
  • Owing in part to the movements in activity indicators, economists’ revisions to their expectations of GDP growth—our fourth measure—also send mixed messages.

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