UBS On-Air: Paul Donovan Daily Audio 'The Wile E Coyote effect continues'
About this episode
Paul Donovan discusses the ongoing Wile E Coyote effect in developed economies, particularly focusing on UK retail sales and consumer behavior.
The Wile E Coyote effect—running off the edge of a cliff, and continuing to run before eventually gravity takes over—remains evident for developed economy consumers. UK March retail sales (which adjust for price effects) showed rising volumes of oil and non-oil sales. The surge in oil volumes means part of the UK’s oil reserves are stored in consumers' cars. The stronger non-oil sales signal consumers will cut savings rates to maintain (or increase) living standards. This cannot carry on forever, but economic gravity has yet to exert itself.
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