By Craig Mellow Order Reprints Print Article
People at a market under a Brazilian flag in Rio de Janeiro, Brazil, on Dec. 08, 2020 amid the coronavirus pandemic. MAURO PIMENTEL/AFP/Getty Images
Brazil is a hard place to be optimistic about. Liberal spending to offset rampaging Covid-19 led to a gaping budget deficit last year, and national debt nudging 100% of GDP.
The economy contracted more than 4% despite this stimulus. Politicians are taking their time about righting the ship for 2021. Congress, home to some 30 competing parties, is set to wrangle over new leadership for the rest of January, then take much of February off for Carnival. A second pandemic wave gathers force in the meantime, with case counts.
China is the only major economy expected to report growth for 2020, helping it close the gap with the U.S. Lifted by its quick recovery from Covid-19, it has also expanded its role in global trade and shored up its position as the world’s factory floor.
Jan. 13, 2021 2:00 pm ET
WASHINGTON The federal budget gap widened in the first three months of the fiscal year, as government spending continued to outpace revenues while the economy slowly recovers from the pandemic-induced downturn.
The U.S. Treasury Department said Wednesday the deficit from October through December totaled a record $573 billion, a 61% increase from the same period a year earlier. Federal outlays rose 18%, to $1.4 trillion, driven higher primarily by automatic safety-net spending such as jobless benefits, nutrition assistance and health care. Total receipts held steady, at $803 billion, the Treasury said.
For the 12 months that ended in December, the government ran a $3.3 trillion deficit, more than triple the shortfall a year earlier and roughly 15.8% of U.S. gross domestic product, the broadest measure of economic output.
The Cleveland Fed president said the economy will continue to need strong government support this year, and suggested she believes monetary policy is currently set at an appropriate level.
The Federal Reserve building Olivier Douliery/AFP via Getty Images
Bank investors might have thought they had reasons to fear a Democrat-controlled government. The prospect of higher taxes and increased regulation implies weaker earnings for the sector.
But historical data collected over nearly 70 years suggests that bank investors not need to worry much about a Biden administration and Democrat-controlled Congress.
Since the Nov. 3 election, bank stocks, as measured by the
KBW Bank Index (ticker: BKX) have soared 31%, outpacing the 10.6% gain in the
S&P 500 over the same period. Bank stocks also got a boost last week after Democrats Jon Ossoff and the Rev. Raphael Warnock prevailed in the Georgia Senate runoffs, giving the party a slim majority in the Senate and control of Congress.