ECONOMIES, START YOUR ENGINES! But watch for yellow flags

Avery Shenfeld
June 29, 2020

The restart of auto racing was among the first signs of an economic renewal. But the revving of the engines was picked up only on TV, with nobody in the stands—a reminder that life isn’t yet back to normal. What will it take for the U.S. economy to be able to wave the checkered flag of full recovery?

An NBA shutdown just before a scheduled tipoff told Americans that their world had radically changed; the restart of auto racing was among the first signs of an economic renewal. But the revving of the engines was picked up only on TV, with nobody in the stands, a reminder that life isn’t yet back to normal. Similarly, what may sound like a full-throated restart of economic engines this spring and summer will leave us a long way from the checkered flag of full employment. We see the U.S. jobless rate sitting roughly 3% higher than full employment in 2021 (Table 1), a big improvement from where we stand, but akin to a typical recession level.

Index of financial conditions

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Avery Shenfeld is Managing Director and Chief Economist of CIBC Capital Markets. He has been with CIBC since 1993 and is widely recognized as one of Canada's leading economists for his perceptive analysis and insight on economic developments and their implications for financial markets.