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Wednesday, January 20, 2021
DESPITE A RECENT bout of weakness, the dollar still looks strong. Consider the Big Mac index, our lighthearted measure of currency valuation. Of the currencies of the 20 trading partners studied by America’s Treasury, our measure suggests that all have gained relative to the greenback since July, but that all apart from the Swiss franc are still cheap. That gives the incoming Biden administration, which has promised to take “aggressive trade-enforcement actions” against currency manipulators, lots to chew on. Our burger-based index is based on the idea that prices should adjust over the long run, so that the same basket of tradable goods costs the same everywhere. Converting prices into dollars at prevailing exchange rates lets you judge whether a currency is too cheap or too dear. To avoid the problem that people buy different things in different places, we compare the price of just one good: the McDonald’s Big Mac. The burgers are not exactly the same across countries—India’s Maharaja Mac, for instance, does not contain beef—but they are consistent enough. A burger in Thailand costs 25% less than in America when its price is converted to dollars at prevailing exchange rates, for example, suggesting that the Thai baht
THE LOCKDOWNS of the spring, which at their peak covered more than half of the world’s population, provoked an almighty downturn. In April global economic output was 20% below where it would have been otherwise. As cases of coronavirus have soared again, rich countries are imposing another round of lockdowns. France was in confinement in November, Italy locked down over Christmas, and England went into a national lockdown on January 6th. Parts of Japan have entered a state of emergency. The situation in America, where local authorities rather than the federal government are mainly responsible for stay-at-home orders, is more complicated. But one measure of lockdown stringency suggests that official restrictions there are about as tight now as they were in the spring. The latest round of lockdowns will hit the economy again—but, perhaps, not as hard. Analysts at Goldman Sachs, a bank, have argued that in Britain’s case “the sensitivity of economic activity to covid-19 restrictions has diminished significantly since the first lockdown.” In research published on January 8th HSBC, another bank, noted that German industrial output “extended its recovery in November, undeterred by the renewed lockdown”. America’s jobs report for December, released on the same day, showed that
IN HIS BOOK “The Emerging Markets Century”, published in 2007, Antoine van Agtmael marvelled at the progress of emerging markets since he coined the term in 1981. Their growth, he wrote, “will constitute nothing less than an economic landslide”. Projections from Goldman Sachs, a bank, suggested that the combined GDP of Brazil, Russia, India and China (the BRICs) would more than triple in dollar terms from 2005 to 2020. In keeping with the mood, the MSCI’s index of emerging-market shares set a record in November 2007. There have been plenty of landslides since. Unfortunately emerging markets have often been caught beneath them. The covid-19 pandemic follows crises in Argentina and Turkey in 2018, the devaluation of China’s yuan in 2015 and the oil-price collapse of 2014. These misfortunes have opened up a large gap between emerging and mature stockmarkets. Whereas shares in the rich world regained their 2007 peak as long ago as 2014, and have since risen by about 60%, MSCI’s emerging-market index did not surpass its 2007 peak until last week, when it at last set a new record, thanks to a furious rally in recent months (see chart).
Correspondent We are looking for a correspondent to cover business, economics and finance across Asia. Please send a covering letter, CV and an unpublished 800-word article suitable for publication to asiafinancewriter@economist.com by February 1st. This article appeared in the Finance & economics section of the print edition under the headline "We’re hiring"
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesThe Stimulus PlanVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyMost Americans Are Expected to Save, Not Spend, Their $600 CheckWhile lawmakers debate increasing the stimulus payments to $2,000, experts say it would make far more sense to give more money to the unemployed.Galen Gilbert, a 71-year old lawyer who lives in a Boston suburb, plans to deposit his stimulus check into savings. “I’m not really suffering financially,” he said.Credit...Katherine Taylor for The New York TimesNelson D. Schwartz and Dec. 30, 2020, 3:48 p.m. ETGalen Gilbert knows just what he will do with the check he gets from Washington as part of the pandemic relief package, whatever the amount: put it in
#masthead-section-label, #masthead-bar-one { display: none }The Coronavirus OutbreakliveLatest UpdatesMaps and CasesVaccination StrategiesVaccine InformationF.A.Q.TimelineAdvertisementContinue reading the main storySupported byContinue reading the main storyIt Could Be a Great Year, if Your Business Survives WinterTough sacrifices may still be required, but many see a post-pandemic resurgence in the year ahead.Maria Rodriguez mopped the front entry at the Hampton Inn & Suites Herndon-Reston in Herndon, Va., which has seen a significant decrease in guests since the pandemic began.Credit...Alyssa Schukar for The New York TimesNelson D. Schwartz and Jan. 11, 2021, 10:46 a.m. ETFor Ashlie Ordonez, owner of the Bare Bar Studio, a spa in Denver, vaccinations for the coronavirus can’t come soon enough. While she anticipates better days later this year, surviving until then will be a struggle,
THE YEAR is 2021, and honestly there ought to be more robots. It was a decade ago that two scholars of technology, Erik Brynjolfsson and Andrew McAfee, published “Race Against the Machine”, an influential book that marked the start of a fierce debate between optimists and pessimists about technological change. The authors argued that exponential progress in computing was on the verge of delivering explosive advances in machine capabilities. Headline-grabbing breakthroughs in artificial intelligence (AI) seemed to support the idea that the robots would soon upend every workplace. Given that, on the eve of the pandemic, jobs were as plentiful as ever, you might now conclude that the warnings were overdone. But a number of new economics papers caution against complacency. The robots are indeed coming, they reckon—just a bit more slowly and stealthily than you might have expected. Economists have, on the whole, been fairly sanguine about the impact of robots and AI on workers. History is strewn with incorrect predictions of the looming irrelevance of human labour. The economic statistics have yet to signal the arrival of a robot-powered job apocalypse. Outside of slumps, firms remain keen to hire humans, for example. Growth in
Is a new supercycle beginning?
AdvertisementContinue reading the main storySupported byContinue reading the main storyEzra F. Vogel, Eminent Scholar of China and Japan, Dies at 90A longtime scholar at Harvard, Professor Vogel wrote books that helped shape how the world viewed the two ascendant economic powers.Ezra Vogel’s writings over six decades established him as a giant in the study of China and Japan and earned him wide-ranging influence.Credit...Ben RosserDec. 22, 2020, 7:49 p.m. ETEzra F. Vogel, an eminent scholar of East Asia at Harvard University whose writings about modern politics and society in China and Japan helped shape how the world understood the rise of those two Asian powers, died on Sunday in Cambridge, Mass. He was 90.The death, in a hospital, was confirmed by his son Steven, who
On average last year almost 30m equity options changed hands each day
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IN THE EARLY months of the covid-19 outbreak, researchers at the Federal Reserve and Massachusetts Institute of Technology published a paper entitled “Pandemics Depress the Economy, Public Health Interventions Do Not”. Examining America’s response to the influenza pandemic that broke out in 1918, they concluded that cities that acted early and forcefully had the best economic outcomes. Those that did not could not escape the pandemic’s shadow: people still curbed their consumption and businesses capped their investment. Cities that imposed strict controls, by contrast, limited the damage to public health and were able to bounce back sooner. Economists will pore over data from the covid-19 shock for years to come. But China’s GDP figures for 2020, published on January 18th, suggest that the researchers’ findings from the influenza of 1918 were spot on. After its early fumbles in managing the novel coronavirus outbreak, China imposed stricter lockdowns than just about any other country. The new data confirm that it was one of a handful of countries to register any economic growth at all last year. China’s GDP expanded at an annual rate of 2.3% in 2020 as a whole. Anyone predicting such a pace before