US Economic Recovery

Thankfully it looks like the American economy is recovering, as is that of China.  This is having a domino effect on optimism for the global market as IMF’s Managing Director Kristalina Georgieva explained:

“While the outlook has improved overall, prospects are diverging dangerously not only within nations but also across countries and regions. In fact, what we see is a multi-speed recovery, increasingly powered by two engines — the US and China.”

Thanks to vaccinations and more US stimulus money the IMF is predicting economic growth at 5.5 percent for this year. Further, there were over 900,000 jobs added in America in March which is the largest leap since August.  As RSM US Chief Economist Joseph Brusuelas said:

“An American economy about to regain its swagger after a year of pandemic-induced crisis was on full display in the March jobs report.”

Furthermore, according to a recent CNN Report based on IMF predictions:

“At $1.9 trillion, the Biden administration’s new fiscal package is expected to deliver a strong boost to growth in the United States in 2021 and provide sizable positive spillovers to trading partners.”

With the increase of Americans’ purchasing power, this will positively impact international consumer spending as they purchase French fashion, Italian cars, Australian precious metals, etc.

Tips with IDT Energy on How to Save on Electricity Costs

Utility bills can be pricey but what many household heads do not realize is that with just a few simple tweaks, bills can be substantially reduced. IDT Energy seeks to focus on providing energy-efficient solutions for its customers so that all Americans can benefit from reduced bills. 

According to EIA 2019 figures, the average residential family spends approximately $118.8 on their electricity bill (over $1,400 per year). This figure may not seem exorbitant, but if even a few hundred dollars per year could be put back into one’s pocket, then that is an appealing thought.

Here are a few simple suggestions to get you started:

  1.  Contact the US Department of Energy to find out how to undertake a very simple home energy audit. That way you can go through each room as well as past electricity bills and figure out where there is money to be saved.
  2. Lower the thermostat.  Even by one or two degrees.  This makes a huge difference to heating/cooling costs
  3. Unplug, unplug, unplug.  Whatever you are not currently using, unplug it. Think about the dishwasher for example that you only put on once a week or the computer.  Turning off lights is also recommended since that saves $0.04 per 40 watts.

Saving money on electricity and utility bills really is quite simple.  It is just a case of increasing awareness and being in the know.

Assessing US Economic Recovery

It is not so simple to pinpoint a trajectory for economic recovery vis-à-vis the continuing impacts of the pandemic.  Jerome Powell of the Fed believes it will depend a lot on how the pandemic plays out and in respect to government regulations.  With new mutations and the resurgence of a more contagious stream, he insists that we remain aware that it is not over yet and people must continue to “stay focused on it as a country and get there. [He added that] the path of the economy continues to depend significantly on the course of the virus. A resurgence in recent months in COVID-19 cases, hospitalisations and deaths is causing great hardships to millions of Americans and is weighing on economic activity and job creation. Overall, economic activity remains below its level before the pandemic and the path ahead remains highly uncertain. As with overall economic activity, the pace of improvement in the labour market has slowed in recent months.”

It’s not easy that the burden has not been shared equally among all  Americans. Those who have suffered the most include low wage owners, African Americans and Hispanics.

Having said that, there is some indication of an economic recovery. There were 22  million jobs lost in March and April of 2020 from the pandemic.  Half of those have come back.  The economy is also only operating at 82 percent capacity. And with the vaccine and additional stimulus checks this could also forge the economic recovery further ahead.

US Economic Performance

According to the IMF, it is anticipated that America’s economy is on track to fare better than that of Canada, Germany and Japan.  Predicted contraction rates are:

  • America: 4.4 percent
  • Japan: 5.3 percent
  • Germany: 6 percent
  • UAE: 6.6 percent
  • Canada: 7.1 percent
  • France: 9.8 percent
  • UK: 9.8 percent

It is thought that the “macroeconomic good fortune” of the United States can be attributed to Washington’s spring stimulus. Plus, America does not have to rely on exports for its growth since such sales only account for 12 percent of US GDP.  This is pretty low when you look at the 32 percent in Canada, 47 percent in Germany and 18 percent in Japan. According to Moody’s Analytics Mark Zandi the greater flexibility of America’s labor market helps as:

 “Americans are more willing to adopt new technologies, to move for a job, and [to] make big changes in how they live and work.”

This is good news for the US economy.

Investments in Society

Investments in ideas and startups is great.  But when the investments seek to benefit society at large, that is even better.  That is what American private investment firm Bain Capital is currently in the process of doing.

The firm – one of the largest multi-asset alternative investment entities in the world – has recently raised $800m in new capital in an attempt to support businesses that are working for the greater good.  The company’s impact investment section based in Boston – Bain Capital Double Impact – is focusing on the creation of environmental, governmental and societal benefits.

Approximately 12 portfolio firms have so far been backed under this program.

Economic Indicators: A Time for Optimism?

According to recent data from the US Bureau of Economic Analysis, there was  an increase in GDP for the Third Quarter of 2020.  This number was 33.1 percent but should not be viewed in isolation since the Second Quarter encountered a 31.4 percent decline. This is indicative of a hopeful strong start to the V-shaped economic recovery.

Also in optimistic economic news, the unemployment numbers are dropping.  In fact, the numbers show that they are at the lowest since March, when the coronavirus pandemic began.    With a PMI (Purchasing Managers Index) number of 59.3 (and that being the 6th consecutive number over 50, 50 being deemed an expansive number), things are starting to look up.

There is still much more to be done.  Many believe the stimulus packages are inadequate and that until there is a vaccine against the coronavirus and industries across the board have the capacity to resume business activities, the tragic economic problems will remain. But these figures are encouraging.

Finally We’re Saving Money!

With all the negative economic and financial consequences and hardships of the coronavirus pandemic worldwide, shockingly Americans seem to be saving money.  Not all Americans of course (those who are out of work are having a terrible time of it) but many others are, quite simply because a lot of expenses are down.

The Northwestern Mutual research that has been published has shown that on average, from this time last year, there has been a 10% spike in personal savings.  In 2019 the average savings figure was $59,737  and today it is $65,900. None of this money relates to retirement.

Furthermore, according to FRED Economic Data, the average amount people are saving escalated to nearly 40% in April.  Since then it has been around 20% each month but that is compared to an approximate rate of 7.5% before the pandemic hit.

With approximately 37% of respondents reporting to be “feeling financially secure” these numbers are historically very impressive.

Economic Recovery? Are We Getting There?

During the first coronavirus wave in the spring, approximately 22 million Americans had no work.  While a couple of months after that saw somewhat of an economic rehabilitation (thanks to record low interest rates and stimulus money) with the second wave things are plummeting further than the initial pandemic attack.  According to High Frequency Economics Chief US Economist Rubeela Faroqi said:

“The layoffs are an additional headwind in an already weak labor market. As long as the virus isn’t contained, this is going to be an ongoing phenomenon.”

Businesses are being forced to reduce costs as demand for services in many industries is weakening. Consumer spending on goods on the other hand is increasing. People are eating and drinking more (short-term) and appliances (longer-term). Personal spending has increased (by about a percentage) and consumer confidence readings has expanded a little too. Between June and August there was a 2.1 percent jump in residential construction employment.

Still, there are way too many Americans still filing for unemployment.  According to the Jobs Report put out by the US Labor Department, what was witnessed in September in labor market gain, is now beginning to dwindle with only an additional 661,000 jobs added in the  month.  August for example, saw an additional 1.5 million jobs.

Personal income fell in August and the growth in consumer spending was slower than it had been.

So it seems like the messages we are receiving are not straightforward at all and coming to any conclusion regarding the economic recovery is hard to measure.