Recovery continues in face of virus resurgence, report says

Despite rising Covid-19 infections that have seen “second wave” case numbers top the “first wave” in some markets, the economic recovery has largely continued in advanced economies, according to a new report from TD Economics.

The report said that while most advanced economies are facing a second wave of infections, the death rate has remained relatively low compared with the initial onset of the pandemic due to improved medical treatment and a higher share of infections among younger people. The report also pointed to new research suggesting the virus “is becoming more viral but also weaker.”

Even as case numbers climb, the report said that distancing efforts don’t appear to have increased much.

“This could be due to the localized nature of new restrictions but also due to lockdown fatigue, which has led to the public not responding to restrictions the same way they did before,” it said.

At the same time, “the labour market is still recovering,” TD said.

For Canada, which is seeing more new cases in Ontario and Quebec in the second wave, the rebound in economic activity is continuing, TD said.

“The labour market recovery has exceeded even the most optimistic of expectations, but employment and hours worked remain well below pre-pandemic levels,” it said.

And while consumer spending has “flattened in recent weeks,” TD noted that the housing market “continues to defy expectations.”

In the U.S. the recovery has also continued, despite the fact that cases are rising again there, too, with some regions in a “third wave.”

TD said that the U.S. job market is still recovering, and that key economic indicators “including economic sentiment are steadily improving.”

“However, this sentiment is fragile and may weaken depending on the course of the virus and any further delays in fiscal support, which at a minimum, will not occur prior to the presidential election on Nov. 3,” TD said.

As for commodity markets, they reveal an “uncertain global recovery,” the report said.

While gold, a safe haven, remains elevated due to continued uncertainty, copper prices are also rising as demand picks up in China.

Additionally, oil prices are recovering, but they remain about 37% below pre-pandemic levels, TD noted.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.