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Mish Question


Pettis Nine Tweet Reply - Emphasis Mine

  1. I'm not sure there's a whole lot I can say that is especially new, Mish. There's a lot of fear everywhere, and Beijing streets and shops are almost empty. People still buy things online – for example my students and musician friends are overdosing on games and streaming, and...
  2. well-known musician told me last night that he did an online DJ set that attracted tens of thousands – but they buy very little that requires being near other people. What is worse, because factories will be closed, a lot of small business owners and workers, especially...
  3. the bottom, will have sharply reduced income for the year, which of course means less consumption. It is hard to imagine that all of this won't have a significant impact on consumption growth in the first and perhaps second quarters (depending on when it starts to...
  4. ...subside). Some consumption might just be postponed, but some of it will be permanently lost, including much of what should have been spent during this very important holiday season (for example, this is the main time to release blockbuster movies, but all the theaters are...
  5. ...closed). Also if workers are unable to earn wages for a few weeks longer than expected, that’s also permanently lost consumption. The more interesting question to me is whether all this will have much impact ultimately on the 2020 growth target of "around 6%", which will...
  6. formally announced in early March. I suspect it won't, at most driving it closer to 5.6% than 6.0%. If that's the case, the economic impact of the coronavirus will be to increase debt even more than expected, as Beijing accelerates later in the year to make up for the...
  7. ...decline in the first and second quarters. It had already decided in Q4 2019 to push forward any and every infrastructure project it could think of, but now it will simply have to find more projects. The point is that while the coronavirus will certainly have an adverse...
  8. ...impact on "real" economic growth, it will probably have very little impact on aggregate economic activity for the year, which is just one more reason to reject an input measure as measuring anything useful. The main place to see evidence of the coronavirus impact is in the...
  9. ...lower consumption share of GDP and the higher credit growth. Finally there are also likely to be interesting political implications, but obviously that’s not easy to write about.

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Mike "Mish" Shedlock

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