In the economy this time it will be different, but not so much

There is something new today in the lockdown and in its economic effects, rather ancient. Giovanni Pascoli will forgive the appropriation for material ends of this magnificent and famous verse of him.

There are many differences between the current phase of economic life, directly affected by the pandemic, and the one experienced last March-April, at the time of the Great closure. But there are also important similarities. Some differences are favorable to the economic scenario, others are not. Let's list them.

1. We don't have a guide to understand what will happen. Then there was the example ofAsia and oceania, of the tsunami that hit those economies. Today that area does not record any increase in infections, because they have been able to take the right countermeasures. Contrary to what we observe in Europe and the United States. With two consequences: no one shows us the path we will follow, and that creates greater uncertainty; that area will continue to grow and support global growth, and that is good.
2. The closure is softer, both in sectors (manufacturing industry and construction remain open) and in areas, with a reduction in economic damage (but also social and health). The exception is China, which has returned to the past squeeze it had recently eased; Is there any relationship between this and China's success in containing the virus among a population of 1,4 billion people? With 60 cases per million inhabitants it is 203rd, in a ranking where the last will be the first; Italy has over 300 times more, and growing sharply, and is 45th. However and everywhere the squeeze has never been fully relaxed and will continue for a long time to come, with inevitable economic effects.
3. The fall in demandHowever, it could go beyond what the severity of the restrictions by itself would cause. Indeed, according to an IMF analysis published in the latest WEO, theself-isolation, induced by fear of being infected, has effects on people's mobility on a scale similar to that of a total lockdown. And if mobility is reduced, consumption is reduced. Furthermore, that fear is more persistent over time than the restrictive measures and therefore has more lasting effects on household spending.
4. However, total demand had not fully recovered to pre-crisis levels, especially in some sectors (air transport, catering, hotels…) and therefore less room for reductionthus also making the new recession less deep.
5. Now we know how economic policies react, who deserved top marks and will continue to do so, supporting income and profitability in the private sector and helping to get credit.
6. Despite the aid, during the first lockdown and immediately after many people have had to resort to savings to cope with the fall in income and bear expenses to ensure health security, and could be induced to throw in the towel or in any case to tighten the purse strings more. In the aggregate savings have increased, but very unequally: a lot for middle-high and high income earners, who spend the most on services that involve social contacts and who do jobs that can be done from home and therefore have not suffered income cuts; not at all, or even decreased, for those at the bottom of the income scale, often with precarious jobs if not outright black jobs (the exception is those who received the super unemployment benefit launched in the USA but which expired in July).
7. From the survey on banking conditions in the Eurozone behaviors of selection in the disbursement of credit, while the banks had closed both eyes to the previous wave of infections. A selection that risks nullifying the expansive monetary policy in place and the one to come.
8. There will not be another oil war, which has taken away revenues and spending power from producing countries. Although in the medium term the black gold will be affected by the anti CO2 policies of the new US leadership.
9. Biden will arrive at the White House and this will reduce the confusion: inside in the fight against the virus (mask yes, mask no, or every other day…); and externally regarding the imposition of new tariffs, which had dampened investment.
10. After the night the day always comes, Chance the Gardener would say (Peter Sellers' latest masterpiece) and the weather forecast even tells us what it will be like. We weren't quite as sure about the recovery that would follow the lockdown recession. We now know that it tends to be much faster than expected, which also helps businesses make decisions. However, there is difference between variation and level. For example: US private sector jobs increased by another 906 in October, bringing the recovery from April's low to more than 12 million; but overall American employment is still more than ten million below February's level. And the longer you are out of work, the more difficult it becomes to find a job.
11. Staying without breathing underwater for a few seconds can (almost) everyone. Staying there for a few minutes becomes already a difficult test. For a few hours it is impossible; in the Middle Ages it was called ordeal. Despite the commitment of policy-makers, poverty has greatly increased in these ten months and now those newly poor will have to stay below the income line that separates the good from the bad for even longer. The virus, like Murphy's misfortune, has an eagle eye.
12. The aura of solidarity has evaporated while the anger is mounted. This social captivity, which finds an easy target in those who have been managing the tragedy that has been going on for ten months, does not help to look at the future with confidence, as well as often making working relationships very tense (especially in hospitals, again on the front line in the war against Covid-19). XNUMX).
13. In the political arena this viciousness translates into a tug of war on the measures to be launched to support the economy, while last time there was competition in generosity. This will be especially true in Washington if the Democrats do not win the two remaining seats in the Senate.
14. The pandemic fallout is happening as temperatures are plummeting in the northern hemisphere, where 90% of the world's population lives, causing the virus will have General Winter on its side, the one who defeated Napoleon and Hitler in their respective campaigns in Russia. Because the virus survives for a long time in cold and humidity, i.e. the microclimate of caves populated by bats. It won't be easy to reduce his presence among us like last time.
15. The vaccine it's (closer) now. But not really close, since there are two-three crucial steps before it becomes safe and valid. "Secure" is the crucial adjective for get people to get vaccinated. In the USA, a country chosen at random, 50% of respondents do not want to do it at all. It is true that 50% of vaccinated people could generate the famous herd immunity (but are we men or sheep?).
16. La household demand has changed. More goods and less services. More home and less clothes and rouge. This is now clear. But at Christmas what gifts people will get that they won't even be able to meet? And the sectors that take stock of a year on Christmas sales, how will they go on? In addition to a shot at K, it risks being a Christmas at K—-.
17. We are at seventeen (we are not superstitious, we fear black swans more than black cats): the dynamics of infections it seems to be starting to fall back here and there already. Not in the USA, however, where instead they are galloping and there are many more outbreaks than last time, so that there is a risk of a more extensive and severe lockdown there, with all the now known consequences. However, reading these numbers remains very difficult (the new infected estimated on the basis of the dead are many more and are still growing by rocket), because they depend on the trend of the swabs. On the other hand, the epidemic is advancing exponentially and the tampons cannot increase at the same speed. And then a clear and targeted policy must be implemented, like where the virus has been tamed. Or use the new rapid tests massively, as the (dis)United Kingdom is preparing to do.
18. Stock markets have not crashed. Because there are so many more certainties (we just explained them), while investors abhor uncertainty. And because the only business that seems to still yield anything is stocks. As long as they are bought at the right price and at the right time. Or that one can be a patient and well-supported investor.
19. The GDP of advanced countries will decline in the current quarter and may not increase in the first quarter of 2021. In Italy, a minus 3-5% is estimated in the last three months of 2020, against -12,8% in March-June. Thus the path of the ascent towards pre-pandemic levels is lengthened. And the course of development could be changed in the coming years, with a reduction of the previous speed (so-called potential growth). With all that follows in terms of people's material well-being and company profits.
20. The world will be even more divided into winners and losersboth among households and businesses. And it will become even more difficult to govern.

Commenting on the economic data available today is an almost pointless exercise. Because they all predate the new pandemic wave. If not for one element: the manufacturing continued to march briskly. Certainly it will not be able to continue like this, inevitably affected by the lower demand. However, between the shift in demand towards goods and continued Asian growth, there will be enough wind in his sails.

Il tertiary, on the other hand, in the Euro-area it was already in recession before the new restrictions. And in Germany, Merkel has already begun to say that the latter will last beyond Christmas. While in Italy we will continue to color the regions at least until the end of winter 2021.

Final icing: thesynthetic index elaborated by the Economist, based on mobility and credit card payments, it began to sink in late October. Hold your breath as long as you can.