Speaker 1: I'm Carol Masser and I'm Tim Stanovik. The issue of
Speaker 1: Bloomberg Business Week this week asked the big question, Carol,
Speaker 1: is going to be a better year than It's an
Speaker 1: important question. It's a big question, and there are a
Speaker 1: few certainties about one, aside from eclipses and meteor showers,
Speaker 1: Peter coy writes in his introduction for Bloomberg Business Weeks
Speaker 1: the year ahead issue. Here in the US, the outlook
Speaker 1: hingches on President Joe Biden's ability to address a health
Speaker 1: crisis which could ease the political and economic ones, and
Speaker 1: Biden's first shot is a one point nine trillion dollar
Speaker 1: coronavirus relief bill. Bloomberg Economics predicts that will be whittled
Speaker 1: down to one trillion dollars, but still enough to push
Speaker 1: economic growth about five percent this year, at least according
Speaker 1: to the economists, and economic growth is hard to predict
Speaker 1: even in a normal year, and infinitely harder with a
Speaker 1: pandemic raging. That's also true for major economies elsewhere in
Speaker 1: the world, including the UK, Germany, Japan, India, and Brazil
Speaker 1: and tim The one outlier China, which clamped down and
Speaker 1: COVID so effectively it was the only major economy to
Speaker 1: avoid a contraction. Bloomberg Economics forecast the country will realize
Speaker 1: GDP growth of eight point two percent this year. Your
Speaker 1: data is a powerful competitive advantage, and the Spunk Data
Speaker 1: to Everything platform can help you turn that data into
Speaker 1: successful outcomes across your entire organization. Learn more at Spunk
Speaker 1: dot com slash Everything. Help is on the way, but
Speaker 1: the world still needs a shot in the arm. By
Speaker 1: Peter Coy. As the coronavirus spread beyond China last spring,
Speaker 1: forecasters abruptly added two percentage points to their growth predictions.
Speaker 1: For it was as if they had turned into a
Speaker 1: chorus of redheaded orphan and any singing I Love you tomorrow.
Speaker 1: Their upgrades didn't signify optimism, though they were a consequence
Speaker 1: of the downturn the forecasters were expecting for with a
Speaker 1: deep recession as the new baseline, the partial rebound they
Speaker 1: anticipated would represent a big year over year percentage increase
Speaker 1: in output. And here we are. COVID nineteen is claiming
Speaker 1: more lives than ever and vaccines are rolling out more
Speaker 1: slowly than expected. So economic activity this year will track
Speaker 1: well below its pre pandemic trajectory. But because it won't
Speaker 1: be as depressed as last year. On paper, twenty twenty
Speaker 1: one will look like a blockbuster. Bloomberg Economics is forecasting
Speaker 1: a four point nine percent increase in the world's gross
Speaker 1: domestic product and a three point five percent increase for
Speaker 1: the US, the strongest since two thousand and five. There's
Speaker 1: less here than meets the eye. Economic growth is hard
Speaker 1: to predict even in a normal year. It's infinitely harder
Speaker 1: with a pandemic. Raging vaccines were developed in record time,
Speaker 1: but more contagious strains of COVID are spreading rapidly. Vaccine
Speaker 1: distribution is proving problematic, and a lot of people still
Speaker 1: aren't taking precautions for them selves and those around them.
Speaker 1: There will be bumps along the way. Bloomberg Economics rights
Speaker 1: in its global outlook understatedly to reflect the greater than
Speaker 1: unusual uncertainty this year. We're showing a range of estimates
Speaker 1: for country by country growth, the lowest and highest forecasts
Speaker 1: among economists surveyed by Bloomberg, along with the median of
Speaker 1: those forecasts and the predictions of the professional economists who
Speaker 1: work for Bloomberg Economics, a sister organization of Bloomberg News.
Speaker 1: Even this range doesn't capture all the unknowns. Any given
Speaker 1: country could do worse than the lowest point forecast for it,
Speaker 1: or better than the highest. There are few certainties about
Speaker 1: one aside from eclipses and meteor showers. Raoul Castro is
Speaker 1: slated to step down as the first Secretary of Cuba's
Speaker 1: Communist Party, ending sixty two years of rule by him
Speaker 1: and his late brother Fidel Angela. Merkel, Europe's most powerful
Speaker 1: leader since two thousand five, will retire as Chancellor of
Speaker 1: Germany after or federal elections scheduled for September six. There
Speaker 1: will also be important elections in Ethiopia, Hong Kong, Iran, Iraq, Israel,
Speaker 1: the Netherlands, and Peru. Japan is debating whether it will
Speaker 1: be safe to host the Summer Olympics. Make that one
Speaker 1: Summer Olympics overshadowing everything is stars. Covie too, a shape
Speaker 1: changing foe that's killed more than two million people, including
Speaker 1: more than four hundred thousand in the US. A highly
Speaker 1: infectious variant discovered in the UK named B has been
Speaker 1: found in more than fifty countries in the US, health
Speaker 1: officials recently said it could be the dominant source of
Speaker 1: infection as soon as March. Local and national governments are
Speaker 1: ordering lockdowns to keep soaring infection rates from overwhelming hospitals.
Speaker 1: That's a blow to economic growth. One indication in the
Speaker 1: US is that the Federal Reserve Bank of Dallas's National
Speaker 1: Index of Mobility and Engagement based on mobile device data,
Speaker 1: has sagged after improvement last summer and fall. Less obvious
Speaker 1: is the scarring that COVID causes. Children who are falling
Speaker 1: behind in school may never completely catch up, and displaced
Speaker 1: workers may have trouble fitting into the post pandemic workplace
Speaker 1: because their skills have atrophied or are no longer in demand.
Speaker 1: It's dawning on lots of unemployed people that they're temporary
Speaker 1: layoffs are in fact permanent. True many have been called
Speaker 1: back to work. In the US, the number of people
Speaker 1: who say they're on a temporary layoff fell from eighteen
Speaker 1: million in April to three million in December, but over
Speaker 1: that same period, the number who say their unemployment is
Speaker 1: not temporary rose six to more than four million, which,
Speaker 1: outside of the period since September, is the highest number
Speaker 1: since four In the aftermath of the global financial crisis,
Speaker 1: job losses have been greatest in the lowest paid occupations.
Speaker 1: Federal Reserve Governor Laole Brainerd said on January that the
Speaker 1: unemployment rate for people in the bottom quarter of the
Speaker 1: wage scale is likely above compared with a jobless rate
Speaker 1: below five for people in the top quartile. As with workers,
Speaker 1: so with companies, some businesses are never coming back because
Speaker 1: COVID has permanently changed the way we do things. That
Speaker 1: will become obvious this year when the economic tide begins
Speaker 1: to rise, But many businesses, say office space leasing, don't
Speaker 1: float with it. This race is the question of whether
Speaker 1: it's a mistake for governments to prop up companies with
Speaker 1: broken business models. Bailout money should be used to bridge
Speaker 1: sustainable businesses that become temporarily unstable due to the pandemic,
Speaker 1: so we don't impair our economy's capacity. Vikram mancher Ramani,
Speaker 1: a lecturer at Harvard's Pulse and School of Engineering and
Speaker 1: Applied Sciences, wrote in an email, it's hard to believe
Speaker 1: that as recently as New Year's Eve, people around the
Speaker 1: world we're saying good riddance to and toasting what they
Speaker 1: thought would be a much better to one in the
Speaker 1: world's biggest economy. It took only six days for the
Speaker 1: new year to prove it could be just as bad
Speaker 1: as the old one. The violent invasion of the capital,
Speaker 1: incited by President Trump did what may prove to be
Speaker 1: lasting damage to America's democratic institutions and its standing in
Speaker 1: the world. What's more, the riot was perceived as a
Speaker 1: smashing success by right wing extremists and therefore could inspire
Speaker 1: more attacks. A day later, the COVID tracking project showed
Speaker 1: record daily fatalities in the US. A day after that,
Speaker 1: weekly initial claims for unemployment insurance reached their highest level
Speaker 1: since August. The American public is being ravaged by two viruses,
Speaker 1: one attacking bodies and one attacking minds. People are afraid
Speaker 1: of getting sick, yet are frustrated with COVID shutdowns. Some
Speaker 1: react with resentment, suspicion, and increasingly unhinged behavior, invading the
Speaker 1: nation's capital, for example. Everyone reacts differently to stressful situation.
Speaker 1: The Centers for Disease Control and Prevention wrote in a
Speaker 1: health bulletin in December, the outlook for the US this
Speaker 1: year hinges on whether President Biden can clear the miasma.
Speaker 1: Fixing the health crisis could ease the political and economic
Speaker 1: ones Biden's first shot is at one point nine trillion
Speaker 1: dollar coronavirus relief bill that includes fourteen hundred dollar payments
Speaker 1: to individuals, supplementary unemployment benefits, help for low income families,
Speaker 1: raising the federal minimum wage to fifteen dollars an hour,
Speaker 1: and assistance to state and local governments in distributing vaccines
Speaker 1: and readying schools for in classroom instruction. Political passions might
Speaker 1: cool at least a bit if the virus is suppressed
Speaker 1: and the economy recovers, but the boldness and breadth that
Speaker 1: make the one point nine trillion dollar bill popular with
Speaker 1: Democrats could doom it with Republicans, who are almost neck
Speaker 1: and neck with Dems in the House and could block
Speaker 1: most of Biden's wish list in the Senate with a filibuster.
Speaker 1: Bloomberg Economics predicted on January fifte that the bill will
Speaker 1: be whittled down to one trillion dollars, still a substantial
Speaker 1: sum that could be enough to push economic growth above
Speaker 1: five percent this year compared with our current base line
Speaker 1: of three point five percent. The economist said. The flailing
Speaker 1: in Washington and state capitals looks even worse when juxtaposed
Speaker 1: with the success of China, which clamped down on COVID
Speaker 1: with compulsory mask wearing, isolation of the sick, and effective
Speaker 1: contact tracing. China's death rate from the virus is less
Speaker 1: than one third of one percent of that in the US.
Speaker 1: Chinese are blithely eating in restaurants, sitting in theaters, attending school,
Speaker 1: and going to work. On January eighteenth, the government reported
Speaker 1: g d P grew two point three percent in twenty twenty,
Speaker 1: which makes China the only major economy to avoid a
Speaker 1: contraction for the year. Exports helped. They rose eighteen percent
Speaker 1: in December from a year earlier, despite slow demand growth abroad,
Speaker 1: because Chinese exporters grabbed market share from foreign rivals this year.
Speaker 1: Bloomberg Economics forecasts that China will take advantage of stronger
Speaker 1: economic growth abroad to realize GDP growth of eight point
Speaker 1: two percent. Don't expect Biden to roll back the Trump
Speaker 1: tariffs on Chinese products anytime soon. The mantra for the
Speaker 1: Biden people has been mostly no sudden moves, says William Reanch,
Speaker 1: a trade official in the Clinton administration and senior adviser
Speaker 1: at the Center for Strategic and International Studies. Biden's team
Speaker 1: is likely to insist that China abide by the import
Speaker 1: commitments it made under a de escalation agreement that took
Speaker 1: effect in February twenty. It will differ from Trump's team
Speaker 1: in pushing China harder on human rights and enlisting allies
Speaker 1: to jointly combat unfair trading practices. The pandemic slammed the
Speaker 1: UK's economy worse than any other member of the Group
Speaker 1: of Seven nations, with GDP declining and estimated ten point
Speaker 1: three percent versus about three point six percent in the US.
Speaker 1: The year's only bright spot was a last minute free
Speaker 1: trade agreement with the European Union that helped the UK
Speaker 1: avoid a chaotic no deal brexit. Bloomberg Economics predicts four
Speaker 1: point two percent growth this year, assuming the virus comes
Speaker 1: under control. Authorities expect to begin lifting the third lockdown
Speaker 1: in early March. In phases, you can't just open up
Speaker 1: in a great open sesame. Prime Minister Boris Johnson told
Speaker 1: reporters on January eighteenth about nine hundred billion dollars in
Speaker 1: loans and grants should begin to flow to the EU
Speaker 1: struggling economies this year thanks to a December deal with Hungary.
Speaker 1: In Poland, which had resisted conditioning recovery assistance on adherence
Speaker 1: to the rule of law. Germany brokered the agreement with
Speaker 1: the UK, cutting ties to the EU. Germany is more
Speaker 1: than ever its dominant member. Economists predict Germany will continue
Speaker 1: to rankle trading partners by piling up big surpluses this year.
Speaker 1: The surplus on its current account, a broad measure of
Speaker 1: trade in goods and services and investment income, could amount
Speaker 1: to six point five percent of g d P this year,
Speaker 1: up from six point three percent in Merkel's most likely
Speaker 1: successor as Chancellor is her Ally Armand Laschette, the governor
Speaker 1: of populous North Rhine Westphalia, who was elected on January
Speaker 1: six to head her party, the Christian Democratic Union. Japanese
Speaker 1: Prime Minister Yoshihide Suga, who took over from the long
Speaker 1: serving Shinzo Abe in September, is under pressure to suppress
Speaker 1: a COVID outbreak that's prompted voluntary restrictions in prefectures that
Speaker 1: account for sixty percent of Japan's economic output. He told
Speaker 1: parliament on January eighth. He's still hoping to stage the
Speaker 1: Olympics this summer in South Korea, which has fought the
Speaker 1: pandemic almost as successfully as China. President Moon jay In
Speaker 1: is able to focus this year on a secondary issue,
Speaker 1: making housing more affordable. The pandemic last year set back
Speaker 1: India's aspirations to replicate the Chinese growth miracle, With GDP
Speaker 1: on pace to shrink six point eight percent in the
Speaker 1: fiscal year that began April one. Bloomberg Economics is looking
Speaker 1: for growth of twelve point nine per scent in the
Speaker 1: fiscal year beginning this April. Brazilian President Jayre Bilsonaro, a
Speaker 1: right wing populist often compared to Trump, is distributing Chinese
Speaker 1: made coronavirus vaccines to shore up his sagging popularity in
Speaker 1: advance of elections in two. In Africa, as elsewhere in
Speaker 1: the developing world, a key challenge for one will be
Speaker 1: getting hold of shots. High income countries have secured eight
Speaker 1: of the supply of the Fiser biointech vaccine and all
Speaker 1: of the MODERNA vaccine as of January. A silver lining
Speaker 1: of was the accelerated adoption around the world of cloud computing,
Speaker 1: video conferencing, and other efficiency enhancing business tools. Jimmy Ethridge,
Speaker 1: Accenture's CEO for North America, says one client of the consultant,
Speaker 1: a retailer with one thousand plus outlets in the US
Speaker 1: and Canada, was fretting before the pandemic that its twelve
Speaker 1: month timetable for enabling curbside pickup might be a bit rushed.
Speaker 1: Once COVID hit, it switched to curbside pickup at all
Speaker 1: the stores in two weeks. It was exhilarating but stressful.
Speaker 1: A lot of twenty was management by adrenaline, Ethridge says,
Speaker 1: adding that this year looks like more of the same.
Speaker 1: I think we're still trying to sprint the marathon. Peter
Speaker 1: Coy wrote that in his introduction for Bloomberg Business Weeks
Speaker 1: the Year Ahead issue. Find more in the current issue
Speaker 1: of Bloomberg Business Week magazine. It's on newsstands, online at
Speaker 1: Bloomberg dot com and on the Bloomberg Terminal, and be
Speaker 1: sure to to listen to our Bloomberg Business Week Radio show.
Speaker 1: It airs live Monday through Friday at two pm Wall
Speaker 1: Street Time on Bloomberg Radio Watch US two on our
Speaker 1: daily broadcast on YouTube. Just search Bloomberg Global News and
Speaker 1: be sure to to listen to our Bloomberg Business Week
Speaker 1: Radio Show airing live Monday through Friday at two pm
Speaker 1: Wall Street Time on Bloomberg Radio. Watches two on our
Speaker 1: daily broadcast on YouTube, just search Bloomberg Global News, and
Speaker 1: you can also see me on Bloomberg Quicktake, available on
Speaker 1: Bloomberg dot com, slash qt, and streaming platforms like Roku,
Speaker 1: Apple TV, Samsung TV and more. I'm Tim Stanovick and
Speaker 1: I'm Carol Master. This is Bloomberg. Join us on January
Speaker 1: twenty sixth through twenty eighth for Bloomberg's The Year Ahead
Speaker 1: Virtual Summit, where global business leaders from Delta, Kole's, Apollo
Speaker 1: Global Management, Bridgewater, Hilton, Carnival, American Express, and many more
Speaker 1: will discuss the most important trends, challenges, and opportunities facing
Speaker 1: executives in twenty twenty one and beyond. Sponsored by ib M,
Speaker 1: Register at Bloomberg Live dot com, slash t y a
Speaker 1: Slash Radio