The last bastions of global growth fall

It is, of course, encouraging that more and more governments feel able to ease the lock-down restrictions. Nevertheless, some decisions seem to be driven by desperation and governments are likely to tough out any second wave of the pandemic rather than close their economy down all over again. The main economic damage has now been done with a surge in Unemployment both US and UK, which had for some years been faring much better on the jobs front than other advanced economies. Over 80% of Americans say that they have $5K or less in savings while over 70% of employers report that they would run out of cash in less than 6 months unless the Government bails them out. Accordingly, it is no surprise that, faced with a cut in their income and/or losing their jobs,  people are reining back both the borrowing and spending that has driven Personal Consumption for decades. Those with spare cash have pushed the personal savings rate to its highest for 40 years while those without reserves are contributing to a surge in mortgage and other debt arrears. It  is a similar situation in the UK. The symbiotic relationship cannot be overemphasised between Employment and Personal Consumption, which accounts for almost 70% of GDP in the US and the UK. Sure enough April Retail Sales have plunged in both economies and those in May are unlikely to be better.  Much of Europe and Asia, having locked down earlier, is already there, alas. The bail-out programmes will help a bit but it will be a long haul back to where we were even as recently as February.