Consumption Growth Could Surprise

| Multi Asset | Market Charts

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.

 

20210107 Consumption Growth
Source: Bloomberg, Unigestion. Data as at 20 December 2020.


Important Information

The information and data presented in this page may discuss general market activity or industry trends but is not intended to be relied upon as a forecast, research or investment advice. It is not a financial promotion and represents no offer, solicitation or recommendation of any kind, to invest in the strategies or in the investment vehicles it refers to. Some of the investment strategies described or alluded to herein may be construed as high risk and not readily realisable investments, which may experience substantial and sudden losses including total loss of investment.

The investment views, economic and market opinions or analysis expressed in this page present Unigestion’s judgement as at the date of publication without regard to the date on which you may access the information. There is no guarantee that these views and opinions expressed will be correct nor do they purport to be a complete description of the securities, markets and developments referred to in it. All information provided here is subject to change without notice. To the extent that this page contains statements about the future, such statements are forward-looking and subject to a number of risks and uncertainties, including, but not limited to, the impact of competitive products, market acceptance risks and other risks.

Data and graphical information herein are for information only and may have been derived from third party sources. Although we believe that the information obtained from public and third party sources to be reliable, we have not independently verified it and we therefore cannot guarantee its accuracy or completeness. As a result, no representation or warranty, expressed or implied, is or will be made by Unigestion in this respect and no responsibility or liability is or will be accepted. Unless otherwise stated, source is Unigestion.

Past performance is not a guide to future performance. All investments contain risks, including total loss for the investor.

Thank you

We've sent an email to confirm your subscription