Recent positive news on the pandemic, and the U.S. fiscal stimulus package expected to arrive soon, have increased confidence among corporations across the world as manufacturing PMIs continue to rise and beat expectations. The latest readings from March 1 came in at 60.8 in the United States, 60.7 in Germany and 55.1 in Great Britain. All readings were well above 50, signaling expansion. Increasing business confidence likely will lead to increased spending, hopefully in the form of adding jobs; thereby decreasing initial claims from their elevated “new normal” numbers of more than 700,000 per week. Also, we are seeing increased confidence among consumers, with spending up 2.4% for middle income and 8.6% for low income families compared to pre-Covid levels. With a new fiscal package coming soon, we expect the spending figures to continue to rise in the next few months.
Sources: Bloomberg for PMIs and initial claims, tracktherecovery.org (Affinity) for consumer spending.
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