The forward-looking stock market celebrates the vaccine news, but the real economy will struggle this winter

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The forward-looking stock market celebrates the vaccine news, but the real economy will struggle this winter, writes Stephen S. Roach: (OPINION)

NEW HAVEN, Conn. —Suddenly, there is a credible case for a vaccine-led economic recovery. Modern science has delivered what must certainly be one of the greatest miracles of my long lifetime. Just as COVID-19 dragged the world economy into the sharpest and deepest recession on record, an equally powerful symmetry on the upside now seems possible.

Just ask American consumers, who, at 68% of GDP, have long accounted for the dominant share of aggregate demand. After plunging by an unprecedented 18% from January to April, total consumer spending has since recouped about 85% of that loss . But the devil is in the details. Face-to-face encounters But services consumption, which makes up over 61% of total consumer spending, is a different matter altogether. Services accounted for fully 72% of the collapse in total consumer spending from January to April. While services have since partly bounced back, they have recouped just 64% of the lockdown-induced losses earlier this year.

Precisely at the moment when the economic calendar typically expects an enormous surge of activity, the odds of a major seasonally adjusted disappointment are rising.

 

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Stocks rise on Wall Street as S&P 500 hits record highThe Standard & Poor's 500 rose to a record high Friday as investors continue to look forward to the distribution of a COVID-19 vaccine and relief for the global economy. BidenBoom Thank you JoeBiden Tell that to the hungry Americans who have no food, housing and basic necessities. This is BS! Markets seem to be the trend in diaperdonald world not in the average Americans pocket!!! Thank you Trump
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