US Regional Outlook: The economy is starting to accelerate but at varying rates across the US
An accelerated vaccine roll-out has raised optimism that social distancing measures will be relaxed in the coming months. The stimulus from the American Rescue Act will boost consumer spending over the first half of the year, meaning GDP should surpass Q4 2019 levels in the second quarter. The recovery in the labor market is likely to be more protracted, and could vary widely across US metros. Job growth in 2021 and 2022 is likely to be led by tourism-heavy cities which faced the deepest ruts in 2020; while GDP growth in the medium-term is likely to be led by metros with a tech-focus (e.g. San Jose, Seattle, and San Francisco).
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Terms of trade will lift income but challenge Australian households
Australia's terms of trade (the ratio of export prices to import prices) increased sharply through the pandemic due to a combination of strong demand and disrupted supply in markets for Australia's major commodity exports. We had anticipated a correction in the terms of trade over 2022, but the Russian invasion of Ukraine and associated volatility in commodities markets has seen the terms of trade spike again.Find Out More
Eurozone: ECB minutes indicate that July rate hike is a near-certainty
The minutes from the April ECB meeting confirm the hawkish tilt initiated a few months ago continues to gain momentum. With a majority of the council increasingly concerned about the inflation outlook, this makes an interest rate hike already in July almost certain. This should not come as a surprise, however, as recent developments render hawks' case arguably easier to make.Find Out More