Charting the Global Economy: Surge in Savings to Power Recovery

Consumers around the world are flush with cash after an all-out effort by governments to ease pandemic-related financial burdens, setting the stage for a robust economic recovery.

In the U.S., data this week showed firmer-than-expected job growth and robust manufacturing, as well as added price pressures that are also evident in other nations.

Higher fuel prices are complicating India’s recovery prospects, while China is targeting economic growth in excess of 6% this year and indicated it would continue fiscal stimulus.

Here are some of the charts that appeared on Bloomberg this week on the latest developments in the global economy:

World

Charting the Global Economy: Surge in Savings to Power Recovery

Consumers in the world’s largest economies amassed $2.9 trillion in extra savings during Covid-related lockdowns, a vast cash hoard that creates the potential for a powerful recovery from the pandemic recession, according to estimates by Bloomberg Economics.

Charting the Global Economy: Surge in Savings to Power Recovery

In much of the economy, the big question is when it will be safe to go back to pre-pandemic patterns of spending. For business travel, it’s more like: Who will want to? Corporate chiefs have noted the effectiveness of video-conferencing tools -- and the money they saved. Many have also pledged to reduce carbon emissions. The upshot may be bad news for anyone looking forward to resuming a road-warrior lifestyle.

U.S.

Charting the Global Economy: Surge in Savings to Power Recovery

Employers added more jobs than forecast in February and the jobless rate declined, suggesting the labor market is clawing its way forward again following several disappointing months. The report adds to recent evidence, including data on manufacturing and retail sales, that the economy is gaining momentum.

Charting the Global Economy: Surge in Savings to Power Recovery

Manufacturing expanded in February at the fastest pace in three years and a gauge of materials costs accelerated the most since 2008 as supply shortages challenge the industry.

Charting the Global Economy: Surge in Savings to Power Recovery

The U.S.’s $1.9 trillion relief bill is large enough to push gross domestic product above the pre-pandemic trend by midyear, according to Bloomberg Economics.

Asia

Charting the Global Economy: Surge in Savings to Power Recovery

China set a conservative economic growth target of above 6% for the year, well below what economists forecast, and outlined ongoing fiscal support to keep the recovery going.

Charting the Global Economy: Surge in Savings to Power Recovery

India’s record pump prices of gasoline and diesel are the newest threat to the economy’s nascent recovery, as high local taxes on retail fuel risk fanning inflation and driving a wedge between the objectives of fiscal and monetary policy makers.

Europe

Charting the Global Economy: Surge in Savings to Power Recovery

Rishi Sunak became the first British finance minister to increase the main tax rate on corporate profits in almost 50 years.

Charting the Global Economy: Surge in Savings to Power Recovery

The European Central Bank has enough space to increase bond purchases in order to limit upward pressures on yields. Bloomberg Economics anticipates ECB President Christine Lagarde next week will draw attention to the risk of premature tightening linked to unwarranted rises in risk-free rates and sovereign-bond yields, and signal a willingness to increase weekly purchases to dampen the move.

Emerging Markets

Charting the Global Economy: Surge in Savings to Power Recovery


Brazil’s economic recovery slowed sharply in the the fourth quarter, supporting the case for fresh stimulus ahead of a congressional vote on another round of pandemic aid.

Charting the Global Economy: Surge in Savings to Power Recovery

Ukraine raised interest rates from a post-communist low -- surprising analysts who’d expected looser monetary conditions to be prolonged as another surge in coronavirus cases threatens the country’s recovery from recession.

©2021 Bloomberg L.P.

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