US Economy in a Snapshot Q3 2020 Report

Economic Outlook

The US economy in Q2 2020 remained suffocated by the COVID-19 crisis and its effects on consumer demand, investment plans and employment. Following the first few weeks of massive lay-offs and high market volatility, the economic situation has somewhat returned to normal. The gradual reopening of the economy in April and May led to a drop in weekly jobless claims to more moderate levels, but consumption growth still remains strongly dependent on the rate of the disease spread.

After nosediving to 16.57 in April, the non-smoothed CEIC Leading Indicator started to recover in the following two months, reaching 71.47 in June. This level, however, is still lower than the average pre-crisis levels, observed since the beginning of 2018. The smoothed indicator, on the other hand, still follows a downward path, declining to 47.18 in June compared to 75.91 in March. It started to post more pronounced declines as early as in December 2019, with the plunge accelerating parallel to the COVID-19 outbreak first in China and then in the rest of the world.

The US dollar remained relatively strong in Q2 2020. Although the dollar index fell by 1.68% in June compared to March, the dollar is likely to stay stable further into 2020.
The main risks to the US economy are related to the worldwide response to the COVID-19 outbreak. The US-China trade negotiations have lost importance, as the focus remains on emergency relief to combat the pandemic and on reopening the US economy. Stock market indices regained some of the ground lost in Q1 2020 and remained highly volatile and overly responsive to every news related to up or down moves of infection rates. Further macroeconomic and stock market developments will strongly depend on the rate of the spread of the disease and any new measures undertaken by the government.