The economies of the United States and Germany in full meltdown

Économies des États-Unis et de l’Allemagne en pleine débâcle

Spencer Platt Getty images Agence France-Presse
The closures caused by the effects of the pandemic have led to a dramatic increase in unemployment in the United States.

The United States and Germany suffered the worst contraction of their economies since the Second world War.

The fall is not a surprise and is a bit less violent than feared, it marks nevertheless the spirits. The gross domestic product (GDP) in the u.s. declined 9.5 % during the second quarter, which ended with the month of June, or the equivalent, annualized), a decline of 32.9 %. It is better that the contraction of 35 per cent that it predicted the experts and the 37 % estimated by the international monetary Fund, but it remains considerable.

Following a first decrease of 5 % in annualized terms during the first three months of the year, the u.s. economy has melted 10.6% during the first six months of the year, its worst contraction since those experienced during the Great Depression and during the demobilization of the end of the Second world War, was observed on Thursday, the economist Gregory Daco, of Oxford Economics.

“But more than its size, it is the speed of this recession, with a decline in 2,5 times more pronounced than during the 2008-2009 financial crisis, but in just two months, compared to 18 for the other. “

This dip in the economy in the second quarter ” reflects the answer given to the COVID-19, with the containment measures imposed in march and April “, before “partially [offset] by the reopening of a part of the activity in certain regions of the country in may and June,” said Thursday the u.s. department of Commerce at the time of disclosing these dismal results.

This was reflected in particular by a collapse, always at an annualized pace of almost 35% of consumption, 27 % of business investment and 64 % of exports.

Modest rebound

The extent of the downfall and the lifting of the containment measures from the month of may are hoping for a rebound in the third quarter, “but the ball will bounce less high than they should be,” said the chief economist of Credit Suisse, James Sweeney, in the Wall Street Journal. It is that, for some time, the réaugmentation cases of contamination by the virus and the measures being taken to control it begin to weigh on economic activity “, noted Wednesday, the chairman of the us federal Reserve system, Jerome Powell.

Unemployment has even started to rise again since two weeks, with 1.43 million new claims from 20 to 25 July only and a total of 17 million of providers the week before, reported Thursday the u.s. department of Labor.

Up to now, emergency assistance from governments has largely contributed to cushioning the shock to individuals, even enabling, in the second quarter, an increase of disposable income of 42 % in annualized terms, argues Benoit P. Durocher, senior economist at Desjardins group. A good part of this assistance, however, must come to an end at the end of the month and the discussions on its extension were still in a stalemate in Congress on Thursday.

So close, so far away

The economic decline suffered by Germany in the second quarter was also historical. The decrease of 10.1 % of GDP in the space of just three months has plunged europe’s largest economy in its worst recession of the post-war period.

Compared to the same date last year, the German economy had melted 11.7 %.

However, unlike in the United States, the country now displays a health status better than that of its neighbours, has seen a stable unemployment rate since the month of June (6.4 % vs. 11.1 % in the United States) and may, in the course of the next month, count on new support measures for individuals and economic stimulus package of 130 billion euros, adopted in June, which will supplement the european recovery plan of 750 billion euros decided by the 27 in Brussels two weeks ago.

The country, however, is not immune to a return of the sars coronavirus. Like other european countries, Germany has witnessed, in effect, a recrudescence of the infections in the favor of summer holidays and the German institute of epidemiological monitoring Robert Koch expressed on Tuesday its “serious concerns” in the face of the figure to increase.

With Agence France-Presse

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