Both the hard data and more timely surveys imply that the major advanced economies have had a mixed start to the year. The US has fared particularly well, thanks to easing pandemic-related restrictions and strong fiscal stimulus. Most notably, $600 stimulus cheques gave a strong boost to US retail sales in January, marking a stark contrast to the falls in sales in the euro-zone and UK which owed to renewed restrictions on the sector. Meanwhile, February’s PMI surveys revealed that the US composite index rose to a seven-year high, consistent with strong gains in GDP. But the PMIs for the euro-zone, UK and Japan all remained below the no-change level of 50. We estimate that US GDP will rise by a healthy 1.7% q/q or so in Q1, while Japanese GDP broadly stagnates, and the euro-zone and UK suffer renewed contractions.
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