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Economics Update October 2020 - US economy: ambivalent balance sheet before the election

Bad Homburg, 10/05/2020
by Axel D. Angermann, FERI
  • Momentum of economic recovery slackens from the fourth quarter
  • Number of permanent job losses is rising rapidly
  • High indebtedness weakens confidence in the dollar

The economic situation has traditionally been one of the most important factors in the American electoral process, and in particular in the question of whether or not a current president can serve a second term. The fact that the election comes at a time of serious economic crisis is, of course, also a disadvantage for Donald Trump. Nevertheless, he can make some points in his favour: Since the end of the severe lockdown measures, the US economy has recovered at an impressive pace. A few days before the election, the Bureau of Economic Analysis will publish its first estimate for economic growth in the third quarter, and if the available indicators are not misleading, it will be an increase of about 7 percent compared to the second quarter. This upswing has now also reached the labour market: The number of people in employment has risen by more than 10 million since April and the unemployment rate has fallen well below the 10% mark. So Trump's calculation of pressing for a quick end to the lockdown measures and chalking up the economic recovery as a personal success could work out.

Many jobs permanently lost

However, there are also results that clearly speak against the incumbent: Despite the impressive growth in the third quarter, economic output is still 5 percent below the previous year's figure. The current economic indicators also signal a clear flattening of the recovery. According to calculations by FERI, the US economy was still growing very quickly until July, but since August the pace of recovery has slowed considerably. And this, too, is making itself felt on the labor market: The number of those who have lost their jobs permanently has recently risen sharply to more than 2 million people. The number of first-time applications for unemployment benefits has levelled off at between 800 and 900 thousand for several weeks, more than at any time in recent decades. Employment in the leisure sector is a quarter below the level before the outbreak of the Corona pandemic. The still high number of new infections should ensure that demand for services remains subdued. The prospects for a further rapid increase in employment are therefore very low.

Government debt as a warning sign

The greatest long-term burden on the US economy, however, is its excessive debt. Government debt already exceeds 140% of GDP and, in the long term, carries the risk that the US dollar will lose its leading role in the global financial system. Neither Trump nor Biden are expected to come up with any solutions, and the issue is likely to play a minor role for most Americans in the November 3rd election.


About Axel D. Angermann

As Chief Economist of the FERI Group, Axel D. Angermann analyses the economic and structural developments of all markets that are important for asset allocation. This data forms the basis for the strategic orientation of FERI's asset investments.

Angermann has been responsible for the analyses and forecasts prepared by FERI for the overall economy and individual sectors since 2008. He joined the company in 2002 as an industry analyst. His professional career began at the Max Planck Institute for Economics and the German Chemical Industry Association. Angermann studied economics in Berlin and Bayreuth.


About FERI

Die FERI Gruppe mit Hauptsitz in Bad Homburg wurde 1987 gegründet und hat sich zu einem der führenden Investmenthäuser im deutschsprachigen Raum entwickelt. Für institutionelle Investoren, Familienvermögen und Stiftungen bietet FERI maßgeschneiderte Lösungen in den Geschäftsfeldern:

Das 2016 gegründete FERI Cognitive Finance Institute agiert innerhalb der FERI Gruppe als strategisches Forschungszentrum und kreative Denkfabrik, mit klarem Fokus auf innovative Analysen und Methodenentwicklung für langfristige Aspekte von Wirtschafts- und Kapitalmarktforschung.

Derzeit betreut FERI zusammen mit MLP ein Vermögen von 39,6 Mrd. Euro, darunter 9 Mrd. Euro Alternative Investments. Die FERI Gruppe unterhält neben dem Hauptsitz in Bad Homburg weitere Büros in Düsseldorf, Hamburg, München, Luxemburg, Wien und Zürich.



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Member of the Management Board
Corporate Strategy, Marketing and Communications

T +49 (0) 6172 916-3192
F +49 (0) 6172 916-1192
presse@feri.de

FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg

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Katja Liese
Member of the Management Board
Corporate Strategy, Marketing and Communications

T +49 (0) 6172 916-3192
F +49 (0) 6172 916-1192
presse@feri.de

FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg

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