WEBVTT - More Vaccinations, More Stimulus, More Sanity 0:00:00.040 --> 0:00:02.680 I'm Carol Masser and I'm Tim Stanovik. The issue of 0:00:02.720 --> 0:00:06.240 Bloomberg Business Week this week asked the big question, Carol, 0:00:06.360 --> 0:00:09.959 is going to be a better year than It's an 0:00:09.960 --> 0:00:11.920 important question. It's a big question, and there are a 0:00:11.920 --> 0:00:17.040 few certainties about one, aside from eclipses and meteor showers, 0:00:17.360 --> 0:00:20.280 Peter coy writes in his introduction for Bloomberg Business Weeks 0:00:20.320 --> 0:00:22.960 the year ahead issue. Here in the US, the outlook 0:00:23.000 --> 0:00:26.040 hingches on President Joe Biden's ability to address a health 0:00:26.120 --> 0:00:29.520 crisis which could ease the political and economic ones, and 0:00:29.560 --> 0:00:32.160 Biden's first shot is a one point nine trillion dollar 0:00:32.200 --> 0:00:36.240 coronavirus relief bill. Bloomberg Economics predicts that will be whittled 0:00:36.280 --> 0:00:39.760 down to one trillion dollars, but still enough to push 0:00:39.800 --> 0:00:42.559 economic growth about five percent this year, at least according 0:00:42.560 --> 0:00:45.120 to the economists, and economic growth is hard to predict 0:00:45.159 --> 0:00:48.000 even in a normal year, and infinitely harder with a 0:00:48.040 --> 0:00:51.680 pandemic raging. That's also true for major economies elsewhere in 0:00:51.720 --> 0:00:55.040 the world, including the UK, Germany, Japan, India, and Brazil 0:00:55.280 --> 0:00:58.200 and tim The one outlier China, which clamped down and 0:00:58.200 --> 0:01:01.320 COVID so effectively it was the only major economy to 0:01:01.320 --> 0:01:05.080 avoid a contraction. Bloomberg Economics forecast the country will realize 0:01:05.080 --> 0:01:09.360 GDP growth of eight point two percent this year. Your 0:01:09.440 --> 0:01:13.119 data is a powerful competitive advantage, and the Spunk Data 0:01:13.160 --> 0:01:15.839 to Everything platform can help you turn that data into 0:01:15.880 --> 0:01:20.480 successful outcomes across your entire organization. Learn more at Spunk 0:01:20.560 --> 0:01:28.039 dot com slash Everything. Help is on the way, but 0:01:28.120 --> 0:01:30.959 the world still needs a shot in the arm. By 0:01:31.000 --> 0:01:35.600 Peter Coy. As the coronavirus spread beyond China last spring, 0:01:36.200 --> 0:01:40.039 forecasters abruptly added two percentage points to their growth predictions. 0:01:40.040 --> 0:01:43.399 For it was as if they had turned into a 0:01:43.480 --> 0:01:47.440 chorus of redheaded orphan and any singing I Love you tomorrow. 0:01:48.640 --> 0:01:53.120 Their upgrades didn't signify optimism, though they were a consequence 0:01:53.120 --> 0:01:57.600 of the downturn the forecasters were expecting for with a 0:01:57.680 --> 0:02:01.480 deep recession as the new baseline, the partial rebound they 0:02:01.520 --> 0:02:05.280 anticipated would represent a big year over year percentage increase 0:02:05.360 --> 0:02:09.919 in output. And here we are. COVID nineteen is claiming 0:02:09.919 --> 0:02:13.120 more lives than ever and vaccines are rolling out more 0:02:13.160 --> 0:02:17.520 slowly than expected. So economic activity this year will track 0:02:17.639 --> 0:02:21.720 well below its pre pandemic trajectory. But because it won't 0:02:21.720 --> 0:02:25.120 be as depressed as last year. On paper, twenty twenty 0:02:25.120 --> 0:02:29.080 one will look like a blockbuster. Bloomberg Economics is forecasting 0:02:29.080 --> 0:02:31.680 a four point nine percent increase in the world's gross 0:02:31.680 --> 0:02:34.799 domestic product and a three point five percent increase for 0:02:34.840 --> 0:02:39.240 the US, the strongest since two thousand and five. There's 0:02:39.280 --> 0:02:43.079 less here than meets the eye. Economic growth is hard 0:02:43.120 --> 0:02:46.800 to predict even in a normal year. It's infinitely harder 0:02:46.800 --> 0:02:50.600 with a pandemic. Raging vaccines were developed in record time, 0:02:51.080 --> 0:02:55.120 but more contagious strains of COVID are spreading rapidly. Vaccine 0:02:55.160 --> 0:02:58.440 distribution is proving problematic, and a lot of people still 0:02:58.480 --> 0:03:01.840 aren't taking precautions for them selves and those around them. 0:03:01.880 --> 0:03:05.040 There will be bumps along the way. Bloomberg Economics rights 0:03:05.040 --> 0:03:09.560 in its global outlook understatedly to reflect the greater than 0:03:09.639 --> 0:03:13.240 unusual uncertainty this year. We're showing a range of estimates 0:03:13.280 --> 0:03:17.000 for country by country growth, the lowest and highest forecasts 0:03:17.040 --> 0:03:20.480 among economists surveyed by Bloomberg, along with the median of 0:03:20.520 --> 0:03:24.040 those forecasts and the predictions of the professional economists who 0:03:24.120 --> 0:03:27.960 work for Bloomberg Economics, a sister organization of Bloomberg News. 0:03:28.760 --> 0:03:32.480 Even this range doesn't capture all the unknowns. Any given 0:03:32.520 --> 0:03:35.360 country could do worse than the lowest point forecast for it, 0:03:35.800 --> 0:03:39.600 or better than the highest. There are few certainties about 0:03:40.360 --> 0:03:45.360 one aside from eclipses and meteor showers. Raoul Castro is 0:03:45.360 --> 0:03:48.200 slated to step down as the first Secretary of Cuba's 0:03:48.200 --> 0:03:51.600 Communist Party, ending sixty two years of rule by him 0:03:51.600 --> 0:03:56.000 and his late brother Fidel Angela. Merkel, Europe's most powerful 0:03:56.080 --> 0:03:59.240 leader since two thousand five, will retire as Chancellor of 0:03:59.280 --> 0:04:03.640 Germany after or federal elections scheduled for September six. There 0:04:03.640 --> 0:04:08.960 will also be important elections in Ethiopia, Hong Kong, Iran, Iraq, Israel, 0:04:09.160 --> 0:04:13.280 the Netherlands, and Peru. Japan is debating whether it will 0:04:13.320 --> 0:04:18.320 be safe to host the Summer Olympics. Make that one 0:04:18.360 --> 0:04:24.000 Summer Olympics overshadowing everything is stars. Covie too, a shape 0:04:24.040 --> 0:04:27.680 changing foe that's killed more than two million people, including 0:04:27.680 --> 0:04:30.839 more than four hundred thousand in the US. A highly 0:04:30.880 --> 0:04:35.800 infectious variant discovered in the UK named B has been 0:04:35.839 --> 0:04:39.520 found in more than fifty countries in the US, health 0:04:39.560 --> 0:04:42.080 officials recently said it could be the dominant source of 0:04:42.120 --> 0:04:46.120 infection as soon as March. Local and national governments are 0:04:46.200 --> 0:04:50.000 ordering lockdowns to keep soaring infection rates from overwhelming hospitals. 0:04:50.520 --> 0:04:53.960 That's a blow to economic growth. One indication in the 0:04:54.080 --> 0:04:57.200 US is that the Federal Reserve Bank of Dallas's National 0:04:57.240 --> 0:05:01.280 Index of Mobility and Engagement based on mobile device data, 0:05:01.560 --> 0:05:06.320 has sagged after improvement last summer and fall. Less obvious 0:05:06.400 --> 0:05:09.919 is the scarring that COVID causes. Children who are falling 0:05:09.960 --> 0:05:13.480 behind in school may never completely catch up, and displaced 0:05:13.520 --> 0:05:16.440 workers may have trouble fitting into the post pandemic workplace 0:05:16.839 --> 0:05:20.000 because their skills have atrophied or are no longer in demand. 0:05:20.680 --> 0:05:23.880 It's dawning on lots of unemployed people that they're temporary 0:05:23.960 --> 0:05:28.080 layoffs are in fact permanent. True many have been called 0:05:28.080 --> 0:05:30.640 back to work. In the US, the number of people 0:05:30.680 --> 0:05:33.239 who say they're on a temporary layoff fell from eighteen 0:05:33.279 --> 0:05:36.920 million in April to three million in December, but over 0:05:36.920 --> 0:05:39.800 that same period, the number who say their unemployment is 0:05:39.839 --> 0:05:44.320 not temporary rose six to more than four million, which, 0:05:44.400 --> 0:05:47.320 outside of the period since September, is the highest number 0:05:47.360 --> 0:05:51.480 since four In the aftermath of the global financial crisis, 0:05:52.440 --> 0:05:55.480 job losses have been greatest in the lowest paid occupations. 0:05:56.240 --> 0:06:00.240 Federal Reserve Governor Laole Brainerd said on January that the 0:06:00.320 --> 0:06:02.480 unemployment rate for people in the bottom quarter of the 0:06:02.520 --> 0:06:06.880 wage scale is likely above compared with a jobless rate 0:06:06.920 --> 0:06:11.479 below five for people in the top quartile. As with workers, 0:06:11.560 --> 0:06:15.600 so with companies, some businesses are never coming back because 0:06:15.680 --> 0:06:19.120 COVID has permanently changed the way we do things. That 0:06:19.160 --> 0:06:22.000 will become obvious this year when the economic tide begins 0:06:22.000 --> 0:06:26.560 to rise, But many businesses, say office space leasing, don't 0:06:26.600 --> 0:06:29.760 float with it. This race is the question of whether 0:06:29.800 --> 0:06:32.280 it's a mistake for governments to prop up companies with 0:06:32.320 --> 0:06:36.600 broken business models. Bailout money should be used to bridge 0:06:36.640 --> 0:06:40.720 sustainable businesses that become temporarily unstable due to the pandemic, 0:06:41.200 --> 0:06:45.799 so we don't impair our economy's capacity. Vikram mancher Ramani, 0:06:46.040 --> 0:06:48.560 a lecturer at Harvard's Pulse and School of Engineering and 0:06:48.600 --> 0:06:52.760 Applied Sciences, wrote in an email, it's hard to believe 0:06:52.800 --> 0:06:55.400 that as recently as New Year's Eve, people around the 0:06:55.440 --> 0:06:58.680 world we're saying good riddance to and toasting what they 0:06:58.680 --> 0:07:01.719 thought would be a much better to one in the 0:07:01.720 --> 0:07:05.120 world's biggest economy. It took only six days for the 0:07:05.120 --> 0:07:06.960 new year to prove it could be just as bad 0:07:07.000 --> 0:07:10.240 as the old one. The violent invasion of the capital, 0:07:10.320 --> 0:07:13.360 incited by President Trump did what may prove to be 0:07:13.480 --> 0:07:17.480 lasting damage to America's democratic institutions and its standing in 0:07:17.520 --> 0:07:20.680 the world. What's more, the riot was perceived as a 0:07:20.720 --> 0:07:24.760 smashing success by right wing extremists and therefore could inspire 0:07:24.840 --> 0:07:28.920 more attacks. A day later, the COVID tracking project showed 0:07:28.960 --> 0:07:32.320 record daily fatalities in the US. A day after that, 0:07:32.600 --> 0:07:36.680 weekly initial claims for unemployment insurance reached their highest level 0:07:36.760 --> 0:07:41.120 since August. The American public is being ravaged by two viruses, 0:07:41.640 --> 0:07:45.920 one attacking bodies and one attacking minds. People are afraid 0:07:45.960 --> 0:07:49.680 of getting sick, yet are frustrated with COVID shutdowns. Some 0:07:49.800 --> 0:07:55.000 react with resentment, suspicion, and increasingly unhinged behavior, invading the 0:07:55.080 --> 0:07:59.840 nation's capital, for example. Everyone reacts differently to stressful situation. 0:08:00.200 --> 0:08:02.640 The Centers for Disease Control and Prevention wrote in a 0:08:02.680 --> 0:08:06.400 health bulletin in December, the outlook for the US this 0:08:06.480 --> 0:08:09.960 year hinges on whether President Biden can clear the miasma. 0:08:10.680 --> 0:08:13.600 Fixing the health crisis could ease the political and economic 0:08:13.640 --> 0:08:17.080 ones Biden's first shot is at one point nine trillion 0:08:17.120 --> 0:08:21.000 dollar coronavirus relief bill that includes fourteen hundred dollar payments 0:08:21.040 --> 0:08:26.080 to individuals, supplementary unemployment benefits, help for low income families, 0:08:26.520 --> 0:08:29.360 raising the federal minimum wage to fifteen dollars an hour, 0:08:29.800 --> 0:08:33.280 and assistance to state and local governments in distributing vaccines 0:08:33.320 --> 0:08:38.079 and readying schools for in classroom instruction. Political passions might 0:08:38.120 --> 0:08:41.240 cool at least a bit if the virus is suppressed 0:08:41.240 --> 0:08:44.800 and the economy recovers, but the boldness and breadth that 0:08:44.880 --> 0:08:47.320 make the one point nine trillion dollar bill popular with 0:08:47.400 --> 0:08:51.480 Democrats could doom it with Republicans, who are almost neck 0:08:51.480 --> 0:08:53.920 and neck with Dems in the House and could block 0:08:54.000 --> 0:08:56.560 most of Biden's wish list in the Senate with a filibuster. 0:08:57.280 --> 0:09:00.800 Bloomberg Economics predicted on January fifte that the bill will 0:09:00.800 --> 0:09:04.240 be whittled down to one trillion dollars, still a substantial 0:09:04.280 --> 0:09:07.920 sum that could be enough to push economic growth above 0:09:08.000 --> 0:09:10.920 five percent this year compared with our current base line 0:09:10.920 --> 0:09:15.240 of three point five percent. The economist said. The flailing 0:09:15.360 --> 0:09:18.920 in Washington and state capitals looks even worse when juxtaposed 0:09:18.920 --> 0:09:21.960 with the success of China, which clamped down on COVID 0:09:21.960 --> 0:09:25.760 with compulsory mask wearing, isolation of the sick, and effective 0:09:25.760 --> 0:09:29.480 contact tracing. China's death rate from the virus is less 0:09:29.480 --> 0:09:32.320 than one third of one percent of that in the US. 0:09:33.120 --> 0:09:37.439 Chinese are blithely eating in restaurants, sitting in theaters, attending school, 0:09:37.559 --> 0:09:41.120 and going to work. On January eighteenth, the government reported 0:09:41.160 --> 0:09:43.959 g d P grew two point three percent in twenty twenty, 0:09:44.360 --> 0:09:47.080 which makes China the only major economy to avoid a 0:09:47.120 --> 0:09:51.680 contraction for the year. Exports helped. They rose eighteen percent 0:09:51.760 --> 0:09:55.480 in December from a year earlier, despite slow demand growth abroad, 0:09:55.960 --> 0:10:00.600 because Chinese exporters grabbed market share from foreign rivals this year. 0:10:00.679 --> 0:10:04.280 Bloomberg Economics forecasts that China will take advantage of stronger 0:10:04.320 --> 0:10:07.839 economic growth abroad to realize GDP growth of eight point 0:10:07.840 --> 0:10:11.520 two percent. Don't expect Biden to roll back the Trump 0:10:11.559 --> 0:10:15.320 tariffs on Chinese products anytime soon. The mantra for the 0:10:15.320 --> 0:10:19.439 Biden people has been mostly no sudden moves, says William Reanch, 0:10:19.480 --> 0:10:22.440 a trade official in the Clinton administration and senior adviser 0:10:22.480 --> 0:10:26.439 at the Center for Strategic and International Studies. Biden's team 0:10:26.480 --> 0:10:29.200 is likely to insist that China abide by the import 0:10:29.240 --> 0:10:32.319 commitments it made under a de escalation agreement that took 0:10:32.360 --> 0:10:36.240 effect in February twenty. It will differ from Trump's team 0:10:36.280 --> 0:10:39.600 in pushing China harder on human rights and enlisting allies 0:10:39.640 --> 0:10:44.760 to jointly combat unfair trading practices. The pandemic slammed the 0:10:44.880 --> 0:10:47.600 UK's economy worse than any other member of the Group 0:10:47.600 --> 0:10:51.360 of Seven nations, with GDP declining and estimated ten point 0:10:51.360 --> 0:10:54.960 three percent versus about three point six percent in the US. 0:10:55.720 --> 0:10:58.160 The year's only bright spot was a last minute free 0:10:58.200 --> 0:11:01.040 trade agreement with the European Union that helped the UK 0:11:01.200 --> 0:11:05.520 avoid a chaotic no deal brexit. Bloomberg Economics predicts four 0:11:05.520 --> 0:11:08.520 point two percent growth this year, assuming the virus comes 0:11:08.600 --> 0:11:12.360 under control. Authorities expect to begin lifting the third lockdown 0:11:12.400 --> 0:11:16.000 in early March. In phases, you can't just open up 0:11:16.040 --> 0:11:19.440 in a great open sesame. Prime Minister Boris Johnson told 0:11:19.440 --> 0:11:23.920 reporters on January eighteenth about nine hundred billion dollars in 0:11:24.000 --> 0:11:26.480 loans and grants should begin to flow to the EU 0:11:26.600 --> 0:11:30.200 struggling economies this year thanks to a December deal with Hungary. 0:11:30.200 --> 0:11:34.240 In Poland, which had resisted conditioning recovery assistance on adherence 0:11:34.280 --> 0:11:37.760 to the rule of law. Germany brokered the agreement with 0:11:37.880 --> 0:11:41.160 the UK, cutting ties to the EU. Germany is more 0:11:41.200 --> 0:11:45.600 than ever its dominant member. Economists predict Germany will continue 0:11:45.600 --> 0:11:49.480 to rankle trading partners by piling up big surpluses this year. 0:11:50.080 --> 0:11:52.840 The surplus on its current account, a broad measure of 0:11:52.840 --> 0:11:56.400 trade in goods and services and investment income, could amount 0:11:56.480 --> 0:11:58.960 to six point five percent of g d P this year, 0:11:59.440 --> 0:12:03.360 up from six point three percent in Merkel's most likely 0:12:03.400 --> 0:12:07.200 successor as Chancellor is her Ally Armand Laschette, the governor 0:12:07.240 --> 0:12:10.680 of populous North Rhine Westphalia, who was elected on January 0:12:10.720 --> 0:12:14.920 six to head her party, the Christian Democratic Union. Japanese 0:12:14.920 --> 0:12:18.280 Prime Minister Yoshihide Suga, who took over from the long 0:12:18.320 --> 0:12:22.000 serving Shinzo Abe in September, is under pressure to suppress 0:12:22.000 --> 0:12:25.720 a COVID outbreak that's prompted voluntary restrictions in prefectures that 0:12:25.760 --> 0:12:29.480 account for sixty percent of Japan's economic output. He told 0:12:29.520 --> 0:12:32.599 parliament on January eighth. He's still hoping to stage the 0:12:32.640 --> 0:12:36.360 Olympics this summer in South Korea, which has fought the 0:12:36.360 --> 0:12:40.280 pandemic almost as successfully as China. President Moon jay In 0:12:40.880 --> 0:12:43.240 is able to focus this year on a secondary issue, 0:12:43.640 --> 0:12:47.760 making housing more affordable. The pandemic last year set back 0:12:47.840 --> 0:12:52.000 India's aspirations to replicate the Chinese growth miracle, With GDP 0:12:52.160 --> 0:12:54.280 on pace to shrink six point eight percent in the 0:12:54.320 --> 0:12:58.439 fiscal year that began April one. Bloomberg Economics is looking 0:12:58.440 --> 0:13:00.400 for growth of twelve point nine per scent in the 0:13:00.400 --> 0:13:05.040 fiscal year beginning this April. Brazilian President Jayre Bilsonaro, a 0:13:05.160 --> 0:13:09.080 right wing populist often compared to Trump, is distributing Chinese 0:13:09.080 --> 0:13:12.400 made coronavirus vaccines to shore up his sagging popularity in 0:13:12.440 --> 0:13:16.719 advance of elections in two. In Africa, as elsewhere in 0:13:16.720 --> 0:13:20.280 the developing world, a key challenge for one will be 0:13:20.320 --> 0:13:24.120 getting hold of shots. High income countries have secured eight 0:13:24.960 --> 0:13:28.520 of the supply of the Fiser biointech vaccine and all 0:13:28.640 --> 0:13:32.440 of the MODERNA vaccine as of January. A silver lining 0:13:32.440 --> 0:13:36.840 of was the accelerated adoption around the world of cloud computing, 0:13:37.280 --> 0:13:42.319 video conferencing, and other efficiency enhancing business tools. Jimmy Ethridge, 0:13:42.440 --> 0:13:46.920 Accenture's CEO for North America, says one client of the consultant, 0:13:47.080 --> 0:13:49.800 a retailer with one thousand plus outlets in the US 0:13:49.840 --> 0:13:53.040 and Canada, was fretting before the pandemic that its twelve 0:13:53.120 --> 0:13:56.600 month timetable for enabling curbside pickup might be a bit rushed. 0:13:57.240 --> 0:14:00.400 Once COVID hit, it switched to curbside pickup at all 0:14:00.400 --> 0:14:04.599 the stores in two weeks. It was exhilarating but stressful. 0:14:05.320 --> 0:14:08.880 A lot of twenty was management by adrenaline, Ethridge says, 0:14:09.320 --> 0:14:11.439 adding that this year looks like more of the same. 0:14:12.240 --> 0:14:15.360 I think we're still trying to sprint the marathon. Peter 0:14:15.480 --> 0:14:18.360 Coy wrote that in his introduction for Bloomberg Business Weeks 0:14:18.400 --> 0:14:20.600 the Year Ahead issue. Find more in the current issue 0:14:20.600 --> 0:14:23.760 of Bloomberg Business Week magazine. It's on newsstands, online at 0:14:23.760 --> 0:14:26.360 Bloomberg dot com and on the Bloomberg Terminal, and be 0:14:26.440 --> 0:14:29.160 sure to to listen to our Bloomberg Business Week Radio show. 0:14:29.160 --> 0:14:31.320 It airs live Monday through Friday at two pm Wall 0:14:31.360 --> 0:14:33.640 Street Time on Bloomberg Radio Watch US two on our 0:14:33.720 --> 0:14:37.200 daily broadcast on YouTube. Just search Bloomberg Global News and 0:14:37.240 --> 0:14:39.440 be sure to to listen to our Bloomberg Business Week 0:14:39.520 --> 0:14:42.000 Radio Show airing live Monday through Friday at two pm 0:14:42.000 --> 0:14:44.480 Wall Street Time on Bloomberg Radio. Watches two on our 0:14:44.560 --> 0:14:47.800 daily broadcast on YouTube, just search Bloomberg Global News, and 0:14:47.840 --> 0:14:50.520 you can also see me on Bloomberg Quicktake, available on 0:14:50.560 --> 0:14:53.920 Bloomberg dot com, slash qt, and streaming platforms like Roku, 0:14:54.000 --> 0:14:57.240 Apple TV, Samsung TV and more. I'm Tim Stanovick and 0:14:57.240 --> 0:15:02.000 I'm Carol Master. This is Bloomberg. Join us on January 0:15:02.080 --> 0:15:05.640 twenty sixth through twenty eighth for Bloomberg's The Year Ahead 0:15:05.880 --> 0:15:10.480 Virtual Summit, where global business leaders from Delta, Kole's, Apollo 0:15:10.520 --> 0:15:15.920 Global Management, Bridgewater, Hilton, Carnival, American Express, and many more 0:15:16.000 --> 0:15:20.640 will discuss the most important trends, challenges, and opportunities facing 0:15:20.680 --> 0:15:25.280 executives in twenty twenty one and beyond. Sponsored by ib M, 0:15:25.480 --> 0:15:28.680 Register at Bloomberg Live dot com, slash t y a 0:15:28.840 --> 0:15:29.920 Slash Radio