An alignment of key market drivers suggests that global consumption growth in H1 2021 stands a good chance of exceeding expectations in the wake of considerable government stimulus.
The scale of the stimulation is unprecedented, approximatively 1.5 times larger than in 2008. The G7 countries have injected an average of 16% of GDP according to the IMF while stimulus packages from countries in the Eurozone and developing Asia far exceed those following the GFC.
Much of this money has gone into into savings, on both the consumer (US households’ disposable income has increased by 13.6%, for example) and corporate sides (across US companies, cash levels are up 2% of revenues). In light of this, world consumption expectations may well fall short. Private economists expect 4.6% growth in consumption in both the US and in the Eurozone next year, which implies 2.4% and 3% in excess of their long-term trends, respectively. In our opinion, consumption is set to creep higher than this, especially in the US: above 5% consumption growth in 2021 would not surprise us.
Source: Bloomberg, Unigestion. Data as at 20 December 2020.
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