The clues to watch out for to gauge how the global economic recovery is going

From the US to nations like South Korea and Australia, there will be plenty of places to watch for a sense of where we are, writes Hamish McRae

Sunday 17 May 2020 18:18 BST
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Wall Street has seen much of the early economic recovery
Wall Street has seen much of the early economic recovery

A Wall Street recovery or a Main Street one? So far – and this goes not just for America but for British and European high streets too – it has just been a Wall Street one.

It has become even clearer in the past few days that what will matter is not how far countries’ economies go down this summer thanks to coronavirus, but rather how quickly they recover. Governments can for a while pump money into the system, either at a grand macro-economic level by boosting the money supply, or at a family one by supporting furloughed jobs and sending cheques to families. But they can’t do it for very long.

A sustained recovery needs those jobs to come back. So far the evidence is that money is helping boost asset prices rather than the real economy. There was a wobble last week and there will be more of those. But while US equity markets – and to a lesser extent UK and European ones – have rebounded, if the economies don’t come back, equity markets will have a dismal few months, maybe years, ahead.

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