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Is the COVID-19 crisis in the US over?

In this article, we will summarize some facts that monitor the development of the US economy and whether it is reaching pre-pandemic levels. So far, we can say that the fiscal and monetary stimulus discussed in the previous article was probably sufficient to revive the US economy. Of course, along with crucial vaccination.

Real GDP

From a real GDP perspective, this may look like it will be in the US after a while and that in a few months (the next quarter), it will even be able to beat real GDP in billions of dollars compared to 2019. Real GDP is adjusted for inflation, meaning it provides a much more reliable overview of the economy's overall performance compared to nominal GDP. However, we should rely only on this indicator to evaluate the state, respectively. Recovery rate?

Real GDP in Billions of Dollars Source: MishTalk

Employment and Non-Farm Payrolls

A very important indicator of the economy is also the employment or unemployment rate. The current unemployment rate in the US is 6%. Before the pandemic, the US unemployment rate was 3.5%. However, "Non-farm payrolls" are also crucial in the US. This indicator measures the change or status of employed people. It monitors monthly how many jobs are being created (outside the farming sector).

Nonfarm Payrolls Source: MishTalk

In the following graph, we can see two key indicators. The orange color represents the development of corporate profits after tax. Here we can confirm that many companies have managed to reach new levels again after a severe loss of income. We can apply this to the American market, but it cannot be completely generalized. This is because, e.g., restaurants, cruise ships, hotels, airlines, and others are stagnating, but many technology giants have improved. The situation in the USA is slowly getting into normal. Vaccination also has a great deal of credit for this, thanks to which the release continues.

US macro Source: Patrik Mackovych | Walfir

The blue curve on the right axis shows the household savings rate. Although the data are still from March, the essence is preserved. The savings rate may be lower, but the high savings rate may be reflected in the growing consumption of Americans in 2021-2022. This could also support the country's GDP. However, it should be noted that the pandemic largely influenced this factor. Still, it should not be forgotten that a certain percentage of respondents said they would use a large part of checks (fiscal incentives) to fund bank accounts.

Buffett Indicator

Finally, we point out an exciting indicator from the legendary investor W. Buffett. This gives the ratio of the total market capitalization (in the US) compared to US GDP. Currently, this ratio is at the level of 204% and expects a negative return on the stock market of -3.7% in one year at current valuations. If we put the ratio market capitalization vs. GDP + The assets of the US Federal Reserve are thus also relatively high, at almost 150%. State comparable to the dot-com bubble in the years 1999 - 2000.

W.Buffett market indicator Source: Gurufocus

WALFIR Technologies is one of the three divisions of WALFIR s.r.o., which is based in Slovakia. The primary interests of this division are analytical, quantitative, and algorithmic...


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