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Intesa Sanpaolo : United States. 2020 opened with new risks for the US economy

Viewpoint : United States. 2020 opened with new risks for the US economy: the COVID-19 epidemic and the Boeing production freeze.

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Weekly Economic Monitor – 21 February 2020

Intesa Sanpaolo – Research Department


While it is still early to assess the effects of the Chinese epidemic, estimates of the short-term effects on US GDP can be made for the production halt of the 737 Max.

The duration of the shock remains uncertain, but there is no doubt that manufacturing remains central as a mechanism for transmitting risks to the US scenario.

The first set of monthly survey data for February have highlighted the effects of the COVID-19 epidemic on foreign orders, which in Japan added to the effects on domestic demand and sentiment of the consumption tax hike.

In Europe, on the other hand, the impact is being offset by resilient domestic demand. However, repercussions will be visible well into the spring, as European manufacturing indices typically lag the Chinese by three months.

The week’s market movers

In the Eurozone, the round of February confidence surveys is reaching its height (German Ifo, French INSEE, Istat indices in Italy and the EU Commission survey for the euro area): we expect the first effects of the COVID-19 epidemic to impact the sentiment of manufacturing companies in particular. German GDP should confirm the stagnant trend observed at the end of 2019. The flash estimates for February should indicate that inflation dropped by one tenth to 1.5% in Germany, to 1.6% in France and to 0.3% in Italy.

The main data releases in the United States this week will be relative to January, and therefore will provide no useful information on the effects of the coronavirus epidemic. The only release of February data will be consumer confidence, which should be confirmed at high levels and remain mostly unscathed from the uncertainty related to both the coronavirus and the elections.

Among January data, orders of durable goods should weaken further, affected by Boeing’s hardships; personal spending and personal income are expected moderately higher, whereas inflation should remain contained; the deficit of the goods trade balance should widen in January, with persistently negative flows; new home sales are expected to be up sharply, driven by mild weather conditions and still low mortgage rates.


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