As The Winter Approaches Economic Recovery Is Going Steady

There have been 30 million COVID-19 cases globally and nearly 950,000 deaths.

Even as the circumstances appear to be steadying in the U.S., the caseload persists raised. Meantime, the World Health Organization has cautioned that COVID-19 cases are rising alarmingly in Europe.

Policymakers are closely monitoring the end of the year when people will have more time spent inside. Jeopardizing other coronavirus infections at a time when colds and seasonal flu stress health systems. Breaks are also putting economists on high alert, with the possibility of repeated harsh lockdowns in some areas. Just as the economic recovery is gaining strength.

Israel kicked off a next general lockdown on Friday. The U.K. government isn’t decreeing another state lockdown. Though the health secretary has said, it would be “the ultimate line of defense.”

Such rules would be the worst-case scenario for economies undergoing a historic increase following a record recession. According to Ben May, director of global macro research at Oxford Economics, most governments will do everything they can to avoid this route.

May said that given the expenses correlated with blunt national lockdowns, policymakers hope they can control outbreaks with more surgical measures.

The Organization for Economic Cooperation and Development stated last week that it now suspects the world economy to contract by 4.5% in 2020. Instead of its previous estimation of 6% in June.

Besides, May said the apparent gains in the recovery have likely been won, and the next phase will be more difficult. The OECD lowered its forecast for global economic growth in 2021, which expects to increase at 5%, not 5.2%.

With consideration to Federal Reserve Chair Jerome Powell, who disturbed markets prior week when he indicated that even though family spending has recovered about three-quarters of its earlier decline, “overall activity persists well under its level before the epidemic and the path ahead prevails highly unpredictable.”

Covid-19 Vaccine and Possible Market ‘potholes.’

The next significant incentive for markets will be a coronavirus vaccine discovery and the U.S. election in November.

In light of the next six weeks could still be full of “potholes” that could give investors some pain, strategists at Goldman Sachs cautioned in a note to investors on Friday.

A big one is attached to the possibility of further U.S. government stimulus. Which the investment bank has warned now “seems like a long shot” before November.

Brexit includes back in the publicity after the U.K. government put forward a bill that would breach part of its previously-negotiated separation deal with the European Union.

That sets a messy break in trade relations back on the table at the end of the year. Though Goldman holds a slimmed-down free trade deal among London and Brussels is still on the cards.

At the same time, there’s the reopening of schools, with Goldman notes that could cause fresh lockdowns like the one just ordered in Israel. That could require a notable change to forecasts.