«Of that security the lightning does NOT keep up with the flash». The economy, unfortunately, is incapable of the deeds of Napoleon, who invented the Blitzkrieg (but the Germans say Bewegungskrieg, «movement warfare») without having either tanks or planes available.
After quick rebound comes the long recovery. The first part of the recovery of pre-pandemic crisis activity levels is taking place very quickly in many sectors, both manufacturing (above all) and services (less widespread). In some, even the production lost during the lockdown is being replenished; where there is the question and where supply and demand may be temporally out of phase (which is not possible in the tertiary sector, where everything is inspired by "cooked and eaten").
But over the reopening phase (and now in reality we are witnessing a reversal towards new partial closures) which is causing the upswing, which will last a few more weeks at the most, that of the return to normality and recovery, which means reaching the pre-recession peak. And this phase will be long because the return will be slow and delayed with respect to the epidemic events, which will leave a sad echo of fears and tremors.
The ECB now expects that inEurozone this will not happen before mid-2022, hopefully; but it could take a few more quarters, given the difficulties that are beginning to be encountered in developing a vaccine that works. The Russian one looks like a fake, the Anglo-Swedish one seems to make you sick.
That return, however, remains obstructed by a series of supply and demand factors: uncertainty which slows down consumption and investment; permanent loss of production capacity for closure of businesses; financial aftermath for unpaid loans; structural displacement towards the digitization of commerce and work (the journey of several years was completed in a few months); trend of the pandemic which inhibits many activities (international travel, use of public transport, hotels and restaurants, starting with the minimum of lunches away from home for students and workers).
Una harsh reality (dura lex hundred lex) that each of us can observe on a daily basis and which refers play force to Lancet of the pandemic.
The analysis oftrend of infections it delivers messages that are both worrying and reassuring. On the one hand, the number of newly infected has risen or remains high anywhere in the world; and this before autumn and winter arrive in the northern hemisphere, where 90% of the people on Earth live.
But it is comforting that such a climb is associated with a much larger number of tests, because the virus is also being sought where it has not yet shown itself with the classic symptoms. So much so that in some countries (United Kingdom, Germany, Italy) positive cases remain a fraction tampon tranquilizer. In others, however, positivity has also increased, and not a little: France and Spain are doing very badly. In the USA the positivity has dropped, but it is still at unsatisfactory values (almost 6%, it should be less than 3%; in New York State it is below 1%).
Going in search of the virus, rather than waiting for it to hunt us down, allows us to cure the sick sooner and better. So that the mortality has dropped towards its physiological level (estimated at around 1%, depending on a series of demographic and health characteristics): globally it was at 40% towards the end of March and is now just over 2%. This by implication means that only half of the infected are diagnosed.
In the main advanced countries the only one that has a mortality rate of the observed cases significantly higher than one are the USA; indicating that the real new infected are 70% more than those detected. In others, including Italy, France and Sweden, but especially Germany, it is well below 1, indicating a likely underreporting of deaths from Covid-19.
However, people's behavior is not only dictated by the actual trend of the pandemic in their country, but also by the perception which have such a trend. According to an IPSOS survey, in many countries the majority of people believe that the epidemic is out of control. For example, in the USA and Spain 80% are of this opinion; in Brazil, India, Mexico and Japan between 60% and 70%; in France, Italy, Russia and the United Kingdom between 50% and 60%. Only in Germany and especially China the population thinks the virus is being kept at bay.
This perception, more or less strong, of permanence of the health emergency discourages demand, because people fear a new closure and not being able to meet essential expenses or, worse, losing their jobs.
There is more than a hint of this fear in the consumer confidence, which after improving, declined again or stabilized at low levels both on both sides of the Atlantic. But with one radical difference between the two ocean sides: in the USA people have lost their jobs during the brutal contraction of economic activity, in the Eurozone jobs have been safeguarded with social safety nets.
So that there is now an increase in employment, here instead the manpower cuts begin to flock in companies that do not have enough demand to be able to pay wages to all their employees. The number of hours worked fell roughly equally in the two large economies, with the result that hours per employee remained almost unchanged in America and plummeted in Europe.
This difference is important for better understanding the Fed's turn to the defense of more or better employment. Well aware of the fact that a more accommodating monetary policy is not enough to have more work, but also that this is necessary condition to bring about the improvement in working conditions and therefore in the quality of life in the most disadvantaged segments of the population. In turn, such an improvement help democracy, because the greater work that results from higher employment makes society more open and tolerant, supportive and civil. Growth has a high ethical value, Benjamin Friedman taught us.
In Europe, for the time being, i central bankers remain well anchored (such as low inflation expectations), even in language, to past strategies, where public enemy number one was high and variable price increases. They are reminiscent of the famous generals who fought the new wars with the weapons and military concepts of the old ones.
But ECB she is also reviewing her strategy and consultation is still ongoing, even popular, in the sense that anyone can have their say on the site (although the questions are not really for ordinary people). Therefore it is not excluded that, albeit with some differences justified by the different context of social policies, Frankfurt follows in Washington's footsteps, throwing into the attic the monetary paradigm that has been so successful since the XNUMXs onwards, but which now appears to be outdated by reality.
