The Day at a Glance | August 3 2020

The Top

· US Congress can finance greater fiscal stimulus: Kashkari (FED).

· Manufacturing activity index for small and medium sized enterprises in China recorded its largest expansion since 2011.

· COVID-19 cases surpass 18 million at a worldwide level; 1 million new cases are added every 4 days.

· Economic indicators: Manufacturing ISM is expected to be published in the US this morning (53.6 e.) as well as Mexico`s PMI.

Economic environment

Neel Kashkari, President of the Minneapolis Federal Reserve, assured that increasing savings among Americans could help finance a greater fiscal deficit. In an interview with CBS, the FED`s voting member assured that Americans have been increasing their savings since the start of the pandemic, which could be used to finance greater government spending in order to back the economy during the pandemic. The savings rate among Americans has increased since March as it grew from 8% (pre-pandemic) to a little over 20% in May. For Kashkari, the government must take advantage of low interest rates and the increase in savings to fund government spending. Additionally, he recommended another temporary lockdown of the economy to control the virus. According to Kashkari, it’s a necessary evil that will ultimately result in a faster and more robust recovery as it would avoid constant outbreaks all over the country, which weaken confidence among economic agents.