The Alphabet Soup of Economic Recovery, 2020.
2020 is indeed a watershed year filled with alphabets.
I have learnt so much in terms of economic recovery for the past 9 months and counting that I never fail to be amazed by an induction of a new “letter” in the “Letter of Fame” in Economics. I have to say that prior to 2020, the letter that was most acquainted and associated with economic recovery is “V”. It means that the current economic contraction experienced by manufacturing and service sectors are temporary and once it bottoms out, a rebound will happen. Of course, that is plain data modelling. No one knows for long it will take shape to a “V” and where the bottom will be. The next letter that entered my vocabulary was “U” shape. Similar to a “V”, the orientation is about bottoming out first, followed by a rebound. The difference? It takes a longer time for recovery to happen. Therefore, the lean “V” turned into a plump “U”. As if that isn’t bad enough, “U” turned into “W”. “W” means that it is not likely for us to just experience one bottom. There could be at least 2 bottoms before the real recovery.
Economists are really creative in ways to capture our attention. Then, the “Shape of no return” appeared. The letter “O” entered the stage. This is easy to understand. What goes around comes around. Governments and Central Banks round the World have been doing a lot to simulate the economy through fiscal and monetary policies and we end up where we started even though we covered a great distance. An analogy I can think of is walking in a desert. Once the “O” is out of vogue, the letter “L” is pushed from the backstage to the front stage. This is the letter that invokes the highest intense feeling amongst the financial literate. What it means is a straight crash from the highest point of economic prosperity back to Dark Ages austerity and we will have to stay there for as long as we could possibly imagine. Not a good scene, as you could imagine. The latest (definitely not last) alphabet to enter the scene and steal the limelight is the letter “K”. This is when pure breed economists have run out of creativity to entertainment to global audience and they borrowed scriptwriters from political scientists. What “K” refers to is a divergence in terms of the distribution of wealth, where the rich get richer and the poor get poorer. This has a strong element of social appeal and probably social flaming but it doesn’t surprise me. 2020 is a heavy election year, isn’t it?
My dad joked about it last night. He mentioned that the next one to appear might be “Z” as global economies stagnate. They zig-zag ahead, collapse, and then zig-zag forward and collapse. We have to pay for the economic abundance created since 2008, he says.
We still have 3 months more before the end of 2020 and I am certain that more alphabets will start entering the vocabulary of economic recovery. As I am staring at my qwerty board now, I wonder. Would the next one be … “X”? Or maybe “R”? I don’t know but I am waiting to be entertained.
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