This Week's State Of The Economy - What Is Ahead? - 13 March 2020

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Mar 14, 2020

This Week's State Of The Economy - What Is Ahead? - 13 March 2020

U.S - A Case in Exogenous Shocks

  • Financial conditions tightened sharply this week as concerns over the coronavirus and the economic fallout of containment efforts mounted.
  • We now look for the FOMC to cut the federal funds rate (FFR) 100 bps at next week’s meeting, which would be the largest single-meeting move on record and bring the FFR lower-bound back to zero.
  • Much of the economic data out this week does not yet cover recent weeks’ turmoil, but the University of Michigan’s preliminary Consumer Sentiment survey showed signs of consumer confidence beginning to fade.

 

Global - Global Economy Peering Over the Growth Cliff

  • It has been another tumultuous week for global financial markets as the global outlook continues to darken quickly. Earlier this week, we cut our 2020 global GDP forecast sharply to 1.9%, though the risks to even that revised forecast are likely now tilted to the downside.
  • Given the fast-changing situation, policymakers are reacting rapidly. The Bank of England surprised with an emergency rate cut this week and the U.K. government announced fiscal stimulus, while the European Central Bank eased monetary policy as well. Look for further global central bank easing in the weeks and months ahead.



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