Original title: The US election has entered the countdown, and the worsening of the epidemic has increased economic uncertainty! Trump's chances of being re-elected have been hit, be waryGood fingerThe rebound was blocked
On September 27 (last Sunday), market analyst Ann Saphir wrote that whether the current US president can be re-elected is usually closely related to economic health. Because the number of cases of infection in the US is still increasing and economic uncertainty is increasing, the voting method for the American public is still unclear. However, investment banks such as J.P. Morgan Chase and Goldman Sachs have lowered their US economic forecasts for the fourth quarter. This is not good news for Trump.
The number of cases of infection in the US is still increasing, and the importance of the economy to the general election is increasing
Last week, the number of new daily COVID-19 cases in the US rose for the first time in eight weeks, leading to a peak of 200,000 deaths last week. The state of the US economy will become more important to the election.
Federal Reserve Chairman Powell has stated many times that the recovery of the US economy depends on the control of the epidemic, which is critical to building the confidence of the American people and resuming economic activity. He emphasized this point again and again last week.
Among the six running states in the US, the most popular states are highly competitive because these are swing states. Voters may vote for the Democratic Party or the Republican Party, especially in Wisconsin. There are now less than six weeks until the November 3 general election. This election will determine whether Republican President Trump will be re-elected or whether Democratic presidential candidate Joe Biden will come to power.
The number of new cases in Wisconsin continues to rise. According to population estimates, the increase is about two and a half times the US average. With an average of more than 1,900 new cases per day, the governor of Wisconsin declared a state of emergency last week. The 7-day average of new cases in Arizona is also rising, but in terms of population, the increase is lower than the national average.
The chart below shows the number of infected people per million people in major US states over an average of 7 days. The increase in Wisconsin, as shown by the blue line, is significant.
Whether an incumbent president can be re-elected is usually closely linked to economic health. However, due to the impact of the pandemic, the state of the US economy and the way Americans vote are still unclear.
According to an Ipsos poll, out of six states with intense election campaigns, Biden's approval rating seems to be ahead of Trump in only two states. One is Michigan, where the epidemic is well controlled, and the other is Wisconsin, which has not yet been able to control the epidemic.
Just like the link between the pandemic and voting, the pandemic and the state of the US economy are less obvious.
As shown in the chart below, Pennsylvania's unemployment rate in August was 10.3%, which is higher than any other running state, even though its infection cases are low and still declining. Arizona had the lowest unemployment rate at 5.9%.
The worsening of the epidemic has led to a slowdown in the US economic recovery, and investment banks have lowered their economic forecasts for the fourth quarter
Across the US, COVID-19 cases soared during the summer. However, as Michael Feroli, chief US economist at J.P. Morgan Chase, pointed out, American households received a significant financial boost in the summer. In July, Americans received $75 billion in additional unemployment benefits. The aid expired at the end of July, reducing the amount of money unemployed households could spend on consumption. Also in July, the US government launched a payroll protection program, providing maximum support to small businesses.
Most of the government aid is coming to an end, and the US economic recovery is showing signs of slowing. Although there are still bright spots, last week's economic data confirmed the popularity of the housing market and the explosion of new business orders for equipment.
However, some 26 million Americans continue to rely on unemployment benefits. There has been little improvement in the flow of people to American restaurants and retail stores recently. Last week's data showed that businesses are under increasing pressure. According to a survey, 40% of small businesses predict they won't be able to earn enough to maintain their business by the end of the year.
Investment banks such as J.P. Morgan Chase and Goldman Sachs have also lowered their US economic forecasts for the fourth quarter.
Goldman Sachs cut US GDP growth expectations for the fourth quarter by half, directly to 3%. Goldman Sachs predicts that in 2020, the US GDP may shrink by 3.5%, while by 2021, the US economy may grow by 5.8%. J.P. Morgan predicts that the US GDP growth rate for the fourth quarter of 2020 will be 2.5%, lower than the 3.5% previously estimated. J.P. Morgan also predicts that in 2020, US GDP may decline by 4.2%, while 2021 will increase by 2.3% year on year.
Huitong.com warned that the worsening of the epidemic has hampered the recovery of the US economy.US dollar indexThe short-term rebound is likely to be blocked. Furthermore, the increasing number of cases will increase public dissatisfaction with Trump's ability to fight the epidemic and reduce his chances of being re-elected. If Biden wins, he may adopt a policy of raising taxes, which will lead to a rapid decline in the US dollar after the election. Investors need to be alert.
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US dollar index
(Daily chart)
At 14:56 Beijing time on September 28th,
US dollar index
Report 94.54.