US economy boom builds

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Readers will know that we have a very bullish outlook for the economic recovery this year. Indeed, we see the US at Chinese-style growth rates for the next year before coming off. The reasons for this are:

  • An ongoing global inventory cycle in goods production that has American wholesalers and retailers short of stock.
  • A very strong property and stock market delivering huge gains to household wealth.
  • Recent falls in the US dollar.
  • Immense fiscal stimulus that has built a war chest of household savings and will move next towards direct public investment.
  • A successful vaccine rollout based around the best available (as opposed to Australia) unleashing all this potential energy.
  • And, a rare profits boom as the resulting topline growth lands upon pandemic cost-out.

Here are some new charts to help illustrate the point. Via Oxford, overall recovery is beginning to accelerate:

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As science puts the virus to the sword:

In part, courtesy of the vaccine rollout:

Which is in the process of dramatically accelerating:

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Notice that the US is not using much of the Astra Zeneca vaccine owing to the three alternatives being materially more effective:

This is one reason to see the lockdown-addicted Australian rebound underperforming versus the US this year.

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About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.