Japan’s GDP, OECD Forecasts and Stimulus Getting Closer
Optimism reigns in the stock markets after several days of sales. It’s fueled by both economic data and US stimulus-related expectations. Japan yesterday reported a double-digit GDP growth rate for the country in the last quarter of 2020. But you shouldn’t flatter yourself too much. It’s because in the next quarter the country had been covered by a wave of a pandemic and a lockdown. So, experts expect negative rates of GDP change in the first quarter of 2021.
Perhaps, the OECD gave a more weighty reason for optimism yesterday. The updated forecasts from the Organization showed a radical change in the OECD’s assessments for the future. And if the forecast for global growth for 2021 was raised from 4.2% to 5.6%, then for the United States it was doubled to 6.5%.
The reason for such generosity was the expectation of the imminent adoption of the US $1.9 trillion stimulus package. Actually, today the House of Representatives should vote for the version of the bill after the vote in the Senate, and after that only Biden will remain. The US President has already announced that he will sign the law as soon as it appears on his desk.
Despite these obvious reasons for joy, we recall that everything has a price. And the Republicans opposed this package not only out of harm, but also because the other side of the coin is very unattractive. In the first 5 months of the new tax year, the US budget deficit has already exceeded the $1 trillion rate.
And this is without taking into account the stimulus package from Biden. After the provisions are implemented, the United States will have every chance to break last year's record for the size of the federal budget deficit. Recall that at the end of 2020, the budget deficit amounted to about 3 trillion.
Today is interesting primarily with data on consumer inflation in the United States. It is possible that markets will panic again if they see signs of an inflationary spiral. In addition, the Bank of Canada will announce its decision on the parameters of monetary policy.
Perhaps, the OECD gave a more weighty reason for optimism yesterday. The updated forecasts from the Organization showed a radical change in the OECD’s assessments for the future. And if the forecast for global growth for 2021 was raised from 4.2% to 5.6%, then for the United States it was doubled to 6.5%.
The reason for such generosity was the expectation of the imminent adoption of the US $1.9 trillion stimulus package. Actually, today the House of Representatives should vote for the version of the bill after the vote in the Senate, and after that only Biden will remain. The US President has already announced that he will sign the law as soon as it appears on his desk.
Despite these obvious reasons for joy, we recall that everything has a price. And the Republicans opposed this package not only out of harm, but also because the other side of the coin is very unattractive. In the first 5 months of the new tax year, the US budget deficit has already exceeded the $1 trillion rate.
And this is without taking into account the stimulus package from Biden. After the provisions are implemented, the United States will have every chance to break last year's record for the size of the federal budget deficit. Recall that at the end of 2020, the budget deficit amounted to about 3 trillion.
Today is interesting primarily with data on consumer inflation in the United States. It is possible that markets will panic again if they see signs of an inflationary spiral. In addition, the Bank of Canada will announce its decision on the parameters of monetary policy.
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