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Despite severe corona eruptions, the level of activity in the US economy continues to rise

Dr. Thomas Gitzel, Chief Economist
Reading time: 2 Min
Demand for electricity increases - air traffic remains the problem child

2020-07-07 VP Bank Barometer

Last update: July 07, 2020

Still in the previous week we warned of caution regarding further improvements. We have now been proven wrong: the level of activity in the US economy continues to rise - despite growing corona figures. The recent good economic reports also fit in with this. The mood in both the manufacturing and service sectors has improved significantly.  According to the ISM index for the US service sector, the gap created by the corona virus has already been closed.

The details of the VP Bank Corona Crisis Barometer fit the bill: Progress has been based mainly on a further increase in demand for electricity. In many regions of the US, demand for electricity has already returned to the levels seen in February 2020. However, air traffic remains a problem child. Passenger numbers have hardly picked up at all recently. Many routes are still suspended. Fears of corona infection in the aircraft cabin are also weighing on the airlines.

Restaurant bookings are also not really getting off the ground. Speaking of restaurant bookings: The example of Australia shows how much public life can be curtailed in the event of another corona outbreak. While the restaurant bookings in "Down Under" had in the meantime reached their initial levels again, things were now rapidly moving in the opposite direction. Compared to the pre-crisis levels, restaurants are now recording almost a fifth fewer reservations. This reflects the recent drastic measures taken by the Australian government.

On the barometer: The measures taken to control the spread of the coronavirus have been drastic. The global economy is severely impaired, resulting in an unprecedented drop in gross
domestic product (GDP). The question is now, how fast the economy will rebound if the restrictions are lifted.

The VP Bank Corona Crisis Barometer tracks how well the economy is recovering.

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