US economic growth faltering ahead of the presidential election

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US economic growth faltering ahead of the presidential election

Published Date: 2020-10-12 | Source: INCE|Community | Author: Chris Gilmour

US economic growth faltering ahead of the presidential election

US weekly jobless claims totalled 840 000 last week, slightly higher than the consensus forecast of 825 000 and slightly lower than the previous week's revised figure of 849 000. Shown graphically, the data appears to be approaching the x-axis almost asymptotically, giving rise to the suggestion that the recovery is faltering.

However, on a longer-term view, continuing unemployment claims fell sharply last week, falling by just over 1 million to 11 million. Continuing claims have more than halved since peaking in May.

Gold prices rose last Friday, on renewed US stimulus hopes as US Treasury Secretary Steve Mnuchin told House Speaker Nancy Pelosi that President Trump is willing to agree to a comprehensive stimulus package.

Both Republicans and Democrats agreed upon the urgent need for stimulus, although the two groups clashed on whether or not to fund states, with Republicans claiming that they have squandered their tax dollars ineffectively.

he US dollar declined on the increasing likelihood of stimulus. US President Donald Trump's woes continue, even though he appears to have made a solid recovery from his Covid19 infection last week. Democratic Party contender Joe Biden's lead appears to have widened in the opinion polls post the initial TV debate and the announcement that Trump had contracted the virus.

With less than a month to go to the Nov 3 election, Biden's lead in national opinion polls is sometimes into double digits, although his lead in the so-called battleground states-vital to secure Electoral College votes-is narrower. Trump has pulled out of the second TV debate, scheduled for Oct 15 in Miami, but subsequently rescheduled as a virtual debate, on the grounds that he's not interested in appearing in a virtual debate.


The organisers insisted on going virtual due to Trump having been diagnosed with being Covid19-positive. The debate has now been cancelled. The S&P 500 closed 3.8% up for the week at 3 477.13 on Fri 9 Oct. From its Sep 2 peak of 3 580.84, the index has now fallen by 2.9%. It has risen by 55.4% from its Mar 23 closing low of 2 237.4.

The UK economy is still stuttering, with GDP growth climbing less than expected in August, adding to concerns the bounce back is losing momentum and a full recovery remains a distant prospect. The Office for National Statistics (ONS) said GDP rose by 2.1% in Aug compared with the previous month as the rebound faltered in the late stages of summer before new restrictions were imposed, falling short of expectations among UK economists for a monthly growth rate of 4.6%.

It followed growth of 6.4% in Jul - revised down from 6.6% , 9.1% in Jun and 2.7% in May. The UK economy was still 9.2% smaller compared with its pre-pandemic levels despite growth in four consecutive months. The food and beverages service sector was up 69.7% month on month on the back of government support schemes such as Eat Out to Help Out and the massive VAT reduction for hospitality companies. The accommodation sector climbed by 76% month on month as limitations to international travel boosted domestic "staycations". The two sectors combined contributed 1.25 percentage points to the 2.1% growth.

The JSE Alsi closed 1.8% up for the week at 55 183 on Fri 9 Oct. From its peak of 61 685 on 25 Jan 2018, the Alsi has now fallen by 10.5% and remains in correction territory. From its recent low point of 37 693 on Mar 19, the index has risen by 46.4%.

The Fragile Five + Russia
Country GDP Growth (%) Inflation (%) Unemployment (%) Interest Rates (%)
South Africa -17.1 3.1 30.1 9.5
Brazil -11.4 3.14 13.8 7.69
India -23.9 6.69 6.7 5.94
Indonesia -5.32 1.42 5.0 6.9
Turkey -9.9 11.8 13.4 13.26
Russia -8.0 3.7 6.4 5.97
Source: Trading Economics

JSE listed company results out this week;

  • 13 October 2020
    • Long 4 Life
    • 14 October 2020
      • Adcorp

      Economic data releases this week;

      • 12 October 2020
        • SA Manufacturing Production August
      • 13 October2020
        • SA Mining Production August
        • 14 October2020
          • SA Retail Sales August
          • 15 October2020
            • SA Building Plans Passed August




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