Economic Forecast: German economy faces biggest slump since WW2 – US employment shows largest decline since 1948

15th May 2020 (Last Updated May 15th, 2020 12:11)

15 May

Deutsche Bank says the Covid-19 pandemic and, in particular, lockdown measures will push the German economy into its biggest slump since WW2. Their report suggests that the Covid-19 pandemic hits German labour market differently than the Global Financial Market Crisis of 2009.

The US Bureau of Labour Statistics said the unemployment rate increased 10.3 percentage points to 14.7 percent in April.

“The employment–population ratio, at 51.3 percent, dropped by 8.7 percentage points over the month. This is the lowest ratio and largest over-the-month decline in the history of the data back to January 1948.”

HSBC has said the near-term global inflation outlook is clear – it is heading even lower. HSBC global chief economist Janet Henry wrote in a blog:

“The collapse in oil prices and discounting by companies keen to boost sales should more than offset higher food prices to turn Eurozone and US inflation negative this summer.”

“But if businesses fail – including restaurants or even airlines – the reduced competition could see the survivors raise prices over the next year or two.

“Supply-chain disruptions may also push up prices. So after hitting new lows by mid-2020, headline inflation will be notably higher in 12 to 15 months as demand increases and oil recovers.”