The Day at a Glance | May 3 2021

The Top

*Yellen doesn’t think that Biden`s spending plans will create inflation.

*Manufacturing PMI in Europe was revised downwards (62.9 vs 63.3 prev.).

*Economic indicators: Manufacturing ISM will be made public in the US (65 e.).

Economic environment

Secretary of the Treasury Janet Yellen assured that President Biden`s economic plan will not create any inflationary pressure, as spending will be distributed throughout a decade. “I don`t believe that inflation will be an issue, but if it becomes an issue, we have tools to address it,” said Yellen in an interview with NBC. Yellen believes that the stimulus`s effect on demand will be moderate since the program is designed to be carried out in the next 8 to 10 years. Regarding government spending and the wide fiscal deficit, Yellen considered that the country has enough fiscal space to carry out any necessary spending to revamp its economy, as the low interest rate environment implies low costs of debt. However, she admitted that budgetary deficits in the long term will have to be contained. Cecilia Rouse, currently serving as Chair of the Council of Economic Advisers for Biden assured that the recent issues seen among productive chains and a lack of supply of labor that some companies have reported are some temporary factors that the rise in prices has caused, but that these are merely temporary setbacks through the recovery. One of the most concerning disruptions is occurring with shipping containers at a worldwide level. Even though prices to move goods in containers have increased to all-time highs (Shanghai to Los Angeles: 4,403 USD for 40 foot containers: 3,500 USD for the Rotterdam to New York route), as consumption at a global level recovers quickly and businesses restock their inventories through the economy`s reopening. This has led to scarcity in the supply of transportation containers and prices have increased – important delays have also occurred. It`s believed that capacity will be surpassed in the summer.