Monthly Economic Monitor

Monthly Economic Monitor

. World: The Delta variant is driving a new wave of infections Daily new cases and deaths related to Covid-19, 7-day moving average 1,100,000 15,000 1,000,000 14,000 900,000 13,000 800,000 12,000 700,000 Cases (L) 11,000 600,000 10,000 500,000 9,000 Deaths (R) 400,000 8,000 300,000 7,000 200,000 6,000 100,000 5,000 0 4,000 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 NBF Economics and Strategy (data from Our World in Data) World: Do the vaccines lose effectiveness over time? United Kingdom: Israel: New cases and deaths related to Covid-19, New cases and deaths related to Covid-19, 7-day moving average 7-day moving average 65,000 1,300 9,000 80 60,000 1,200 Cases (L) 8,000 70 55,000 1,100 50,000 1,000 7,000 Cases (L) 60 45,000 900 6,000 40,000 800 50 5,000 35,000 700 40 30,000 600 4,000 Deaths 25,000 500 30 Eurozone: The economy seems to be holding up against Delta (R) 3,000 20,000 400 European Commission Economic Sentiment Indicator Markit PMI Index 20 15,000 300 2,000 Last observation July 2021 120 65 10,000 200 Deaths (R) 10 Mfg 1,000 115 60 5,000 100 0 0 0 0 110 55 2020 2021 2020 2021 Comp 105 50 NBF Economics and Strategy (data from Our World in Data) 100 45 Long-term average 95 40 Services 90 35 85 30 80 25 75 20 70 15 65 10 2005 2010 2015 2020 2018 2019 2020 2021 NBF Economics and Strategy (data from Refinitiv) Eurozone: Still much to make up Emerging economies: Fiscal conditions are more constraining Real GDP Total measures* implemented since January 2020 to counter effects of Covid-19 102 2019Q4 = 100 18 101 U.S. % of GDP 100 16 99 98 14 Eurozone 97 96 12 95 94 10 93 92 8 91 6 90 89 4 88 87 2 86 85 0 2018 2019 2020 2021 Advanced economies Ermerging economies Developing economies NBF Economics and Strategy (data from Refinitiv) * Includes fiscal measures plus loan programs, loan-guarantee programs and government purchases of equity NBF Economics and Strategy (IMF data) Developed economies: Delta variant is slowing recovery World: Tourism is very far from its pre-pandemic volume Citi Economic Surprise Index for the G-10 countries 200 International tourist arrivals, Tourist arrivals by region, Index change from pre-pandemic peak change from pre-pandemic peak Last observation May 2021 (May 2021) 160 10 % 0 120 America -10 80 -20 Africa 40 -30 Europe -40 0 -50 -40 World -60 -80 -70 Middle East -80 -120 -90 Asia/Pacific -160 % 2006 2008 2010 2012 2014 2016 2018 2020 2022 -100 2020M01 2020M05 2020M09 2021M01 2021M05 -100 -80 -60 -40 -20 0 NBF Economics and Strategy (data from Bloomberg) NBF Economics and Strategy (data from United Nations World Tourism Organization) China: Services output slowed by shutdowns Non-manufacturing PMI, last observation August 2021 58 Index 56 54 52 50 Expansion 48 Emerging countries: Greater sensitivity to interest rates Volume of credit extended to nonfinancial sector as % of GDP 46 Contraction 250 44 % of GDP 42 240 40 230 38 220 36 210 34 200 32 190 30 180 28 170 2019 2020 2021 160 NBF Economics and Strategy (data from Bloomberg) 150 140 130 120 110 100 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 NBF Economics and Strategy (data from Belt and Road Initiative) Emerging countries: Markets still confident JP Morgan index of emerging-country currencies 65 Index 64 63 62 World: Supply chains knocked for a loop by Covid 61 Baltic Dry Index and benchmark cost of shipping a 40-ft container from Hong Kong to Los Angeles 60 4,400 11,000 Index US$ 59 4,000 10,000 58 3,600 9,000 57 3,200 8,000 56 55 2,800 7,000 Baltic Dry index (L) 54 2,400 6,000 53 2,000 5,000 52 2018 2019 2020 2021 1,600 4,000 NBF Economics and Strategy (data from Bloomberg) 1,200 3,000 800 2,000 400 1,000 Cost of shipping a container from Hong Kong to Los Angeles (R) 0 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 NBF Economics and Strategy (data from Bloomberg and Drewry Shipping Consultancy) U.S.: Resurgence of Covid Daily new cases and deaths related to Covid-19, 7-day moving average 280,000 3,500 260,000 3,250 240,000 3,000 220,000 2,750 200,000 2,500 180,000 2,250 Cases (L) 160,000 2,000 140,000 1,750 120,000 1,500 100,000 1,250 80,000 1,000 60,000 750 40,000 500 20,000 Deaths (R) 250 0 0 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 NBF Economics and Strategy (data from Our World in Data) U.S.: The current wave of Covid seems less damaging to the economy Google Mobility Report for retail and recreation, 7-day moving average 12 8 4 0 -4 -8 -12 -16 -20 U.S.: A sharp decline of consumer confidence in August -24 Conference Board and University of Michigan confidence indexes -28 -32 140 108 Index Index -36 135 104 -40 Conference 130 Board (L) 100 -44 -48 125 96 2020Q1 2020Q2 2020Q3 2020Q4 2021Q1 2021Q2 2021Q3 120 92 NBF Economics and Strategy (data from Google) 115 88 110 84 105 80 100 76 95 72 90 University of 68 Michigan (R) 85 64 2019M02 2019M07 2019M12 2020M05 2020M10 2021M03 2021M08 NBF Economics and Strategy (data from Refinitiv) U.S.: Households in good shape even without transfer payments Personal income excluding transfers Estimated excess savings, each month since beginning of pandemic 105 450 2020m02 = 100 US$ billion 104 Total: 400 $2.282 trillion 103 12% of 2019 GDP U.S.: Not enough job openings to make up the employment shortfall 102 350 Total demand for labour: employment + unfilled positions 101 300 160 100 Million 99 158 −2.6M 250 98 156 97 200 154 96 150 152 95 150 94 100 148 93 50 146 92 144 91 0 2019M11 2020M04 2020M09 2021M02 2021M07 2020M03 2020M07 2020M11 2021M03 2021M07 142 NBF Economics and Strategy (data from Bloomberg and Refinitiv) 140 138 136 134 132 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 NBF Economics and Strategy (data from Bloomberg) U.S.: Worst buying conditions in decades University of Michigan consumer surveys, buying conditions for vehicles and houses 190 Index 180 170 Houses 160 150 U.S.: Demand for labour falls short of pre-pandemic level 140 Total demand for labour (employment + job openings) in July 2021* vs. 2019 average 130 120 Vehicles Total Employment 110 Government 100 Private Goods 90 Services 80 Natural resources 70 Leisure/Hospitality 60 Accom/Food services Information 50 Education 40 Wholesale 30 Real estate 1980 1985 1990 1995 2000 2005 2010 2015 2020 Construction NBF Economics and Strategy (data from Bloomberg) Manufacturing Health/Social assistance Other services Retail Prof/Business services Finance/Insurances Transport/Warehousing % chg. -14 -12 -10 -8 -6 -4 -2 0 2 4 6 * July job openings as estimated by NBF NBF Economics and Strategy (data from Bloomberg and Refinitiv) U.S.: Vehicle inventories at an all-time low Vehicle inventories 12-month change in prices of new/used vehicles according to Consumer Price Index 2,000 7 50 Units % y/y 1,800 6 40 U.S.: Inflation expectations on the rise New (L) University of Michigan consumer surveys, expected inflation over next 12 months and next 5-10 years 1,600 5 30 4 1,400 5.6 % 3 1,200 20 5.2 2 1,000 10 4.8 12 months 1 800 0 0 4.4 600 -1 Used (R) -10 4.0 400 -2 -20 3.6 200 -3 0 -4 3.2 1970 1980 1990 2000 2010 2020 2000 2005 2010 2015 2020 2025 NBF Economics and Strategy (data from Bloomberg and Refinitiv) 2.8 5-10 years 2.4 2.0 1.6 2006 2008 2010 2012 2014 2016 2018 2020 2022 U.S.: A roaring seller’s market in housing NBF Economics and Strategy (data from Bloomberg) 12-month change in S&P CoreLogic Case-Shiller 20-City Home Price Index vs. resale-market inventory 25 % y/y All-time high 20 15 Home prices (R) 10 5 0 -5 -10 12 Months of inventory -15 11 -20 10 9 8 Ratio of inventory to monthly sales – 7 resale market (L) 6 5 4 3 suppy 2 1 Short 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 NBF Economics and Strategy (data from Refinitiv) U.S.: GDP back to potential in Q2 2022 Real GDP with NBF forecasts vs. potential GDP as estimated by CBO 20,800 US$ billion 20,400 2022Q2 U.S.: A run-up of prices way out of the ordinary 20,000 Deviation of 12-month inflation from 10-year average CBO estimate of potential GDP 19,600 4 Standard deviations 19,200 3 18,800 2 NBF forecast of real GDP 18,400 1 18,000 0 17,600 -1 17,200 2016 2017 2018 2019 2020 2021 2022 -2 NBF Economics and Strategy (data from CBO) -3 -4 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 NBF Economics and Strategy (data from Bloomberg and FRED St.

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