Hello and welcome to the download, I’m your host, Dave Richardson, and I’m joined again today by Eric Lascelles, the chief economist at RBC Global Asset Management. And one of the things I wanted to highlight in the podcast today is, along with having Eric regularly on this quick podcast with updates, so you can hear his view on what’s going on with current economic data and what’s going on in the markets, and how we’re working through the Covid-19 pandemic. Eric is a fantastic follow on Twitter, so I’d highly recommend that you check out whom I would describe as Canada’s hardest working economists. He also pens a macro memo, it’s called, every Monday afternoon, which is also available on the RBC Global Asset Management Client Support Site. It’s rbcgam.com/support. That is another great place to go and get new content and updates on what’s happening in markets, the global economy and the pandemic. But I thought I’d check in with Eric this morning, since he wrote his last memo on Monday, to see, with all of the different earnings reports, all the different economic data points that have been coming out this week, how has it changed his view in any way versus where he was even a few days ago? This is such a rapidly evolving event. Eric, so what would you say to that?
Certainly lots of new things coming along. I would say maybe two main themes to discuss. One is, we track real time economic indicators. It used to be good enough to look at a monthly figure and that would suffice, but things are moving so quickly. We’ve had to redo that. We’re looking at movie theater ticket sales and emergency room traffic, and things like that. And so I can say we’re seeing some stabilization in some of those measures, even some slight improvement off of, I should warn, very low bases. And so, not wonderful and hardly signalling an imminent rebound. But nevertheless, for instance, New York City emergency room traffic is substantially down. Air travel is up a little bit. Still very low in all cases, but up a little bit. We can say U.S. movie theater sales are rebounding. I should emphasize we’re talking like tens of thousands of dollars across the whole country. And so let’s not get too excited. But it was a zero for several weeks, and it’s not a zero anymore. We’ve seen U.S. raw steel production jumping a little bit again from a very low level. So at a minimum, I’m seeing evidence of stabilization at the bottom as opposed to an endless decline. So we’ll take that. That’s what we expected, but we’ll take that. So I think that’s an important element of this. And then maybe the other aspect that we’ve been thinking about as well is the nature of the recovery. And for several weeks now, including in those macro memos, we’ve been warning that the risk here is that the recovery proves even more sluggish than we were assuming. And by the way, we’ve been assuming a fairly sluggish recovery relative to a lot of forecasters out there. So the question is, does that remain true? And unfortunately, my sense is that it is still the issue here. And so part of the story is one in which governments could say tomorrow: «hey, everybody, you can go back to your normal life!» And my suspicion is people aren’t going to race out to concerts and restaurants and buy plane tickets and these sorts of things. And so there’s an organic demand side element that’s going to be slow to come back. But equally, I think we’ve gained a greater appreciation in recent weeks for the idea that even in terms of what the government say, it’s not going to be a «hey, everybody, go back to your normal activity!» It’s going to be this very incremental thing of: now dentists can go back to work and now this other group can go back. And we’re probably not going to see restaurants and concerts and theaters for a very long time. And we’re going to have a very incremental approach. And so on the positive side, we’re already starting to see some evidence of things restarting in Europe and in parts of the U.S., and Saskatchewan now talking about a fairly soon incremental restart in Canada. So maybe the restarts even a bit sooner than we’re assuming, but it’s probably going to be extremely gradual and particularly people like you and I who can work from home. My guess is we’re going to be working from home for an awfully long time just because we can and we need to get parts of the economy going that can’t function from home.
And that’s a great lead into to where I think I’ll take you the next time you appear on the podcast is start to talk about, because I know you’re trying to get your head around all of the things that are going to change and evolve based on the collective experience we’ve had, particularly business wise, economic wise, dealing with the Covid-19 pandemic. So, Eric, thanks again for joining us today. Again, please follow Eric on Twitter — great information coming out regularly —, and check out that macro memo on a weekly basis and look for his TV appearances, if you want to see what Eric looks like on BNN. And everyone have a great weekend and we’ll see you next week on the download.