U, L, W -- They All End Up Spelling Trouble
By looking only at the broad shape of coronavirus recoveries, we risk missing lessons from the positive data out there.
Mmm, mmm, hmm?
Photographer: Chris Goodney/Bloomberg
For all the time spent trying to identify “V-shaped” recoveries or worse-faring “U” and hapless “L,” letters may not be the most enlightening way to understand the rebound from the coronavirus pandemic. Perhaps a better analogy is a squiggly line, with economic life rolling forward and looping back as countries cycle in and out of lockdowns.
This is nowhere more apparent than in Asia, where data have been patchy. The Bank of Japan's quarterly Tankan survey, released Wednesday, showed confidence among the biggest manufacturers sinking to levels unseen since the global financial crisis. Drill deeper, however, and the same report shows that plans for capital spending jumped 3.2%, twice as much as forecast and a nice turn from the decline in the previous quarter. That sign of resilience won't prevent Japan from having a down year, given the projected 20%-plus plunge in gross domestic product during the second quarter. But you can find reason for hope amid all the despair.