The Economy – Overview, Economic Drivers and Consumer Trends

With trade wars and international security issues global economic health has been under stress from past few years. COVID-19 has only exacerbated the matters. Global economy, inter alia, is of course closely linked to oil demand and supply scenario as well – so Mark Rossano of Primary Vision gives us a short overview of the recent economic news and trends in this interesting show called The Economy. Let’s see what he discussed in the latest issue.

The buzz word of late is slowdown, recession or even depression. CEO’s and policy makers are concerned with the shape of economic recovery. Some hinting towards a long stretch of stagnation, panic and some, on a slightly positive note, insinuate a slow recovery. Mark set the stage clear by saying it is going to be a mix of both, the world after all isn’t black and white. We are in stagnation but there are some bright spots as well. However, one thing he highlights and which is extremely important, is the loss of income, wealth and therefore, spending power.

In Europe, Germany seems to be the main driver of growth in terms of imports/exports but there can be a overhang as we will see below. US debt is expected to rise to about 98.5 percent in 2020,Euro Area to 103 percent. The real issue is treasury bills have been outstanding and have to be rolled-over to fill the gap of fiscal stimulus – There has been a huge surge in such programs but the question – how is that going to happen – seems relevant? What about the GDP gap, who is going to fill that? There is another pressing issue that we highlighted in the beginning of the blog issue- we are losing tax revenues, why? low spending, why? companies and people both are engaged in low activity, why? read the starting.

Taking Stock of the Virus Damage – Look at the graph below. Spain is in trouble. But Germany is going to be the real problem. Why, you say? Well, Mark talks about a stronger Euro above— the question arises, what is this going to do to the exports as inflation increases across the globe – currencies fluctuate against a rising Euro. Let’s see what ECB do in the coming weeks.

Activity level in Europe: There has been an increase in daily activities but in Spain and Italy we also see this slowing down (remember Google Mobility Data showed something similar). An Average mobility decline of 21 percent YoY is already worrisome but to add fuel to this fire consider the potential problems with Germany both in terms of economy and COVID-19 cases. This will lead to decreased mobility and therefore the implied demand will be under-pressure (Once again read our last blog on EIA).

Current activity Indicator: There Bright spots in this terrain. Manufacturing picked up recently, of course , this follows that there was demand of new orders as well. Consumable Consumer goods also experience some optimism. However, what is upsetting and can have long term consequences is Labor. We can see contraction here. This unemployment  issue isn’t confined to U.S. only but is prevalent all across the world.


PMI Index: June till July, we had increase, expansionary period. Inventories remained low. But moving ahead inventories might rise. Uncertain period of cold flu season, uncertainty over employment and therefore all things associated will be affected. new export orders are already started to flatten out.


Services were high but it isn’t translated into an uptick in jobs. Note that we will continue to stress on the consumer side. Why? because it drives demand!!

Asian PMI’s are the no different – there has been increase in some places. Take for instance China, we see increased activity there but upon closer observation we learn that it was the construction side that contributed most to the upsurge…problem remains at consumer side!

Another interesting indicator is flows back to country. Naturally, pressure on employment side is translating into reduced remittances – see the chart below.

Lots of other insights if you watch the video here.


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