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The economic situation has traditionally been one of the most important factors in the American electoral process, and in particular in the question of whether or not a current president can serve a second term. The fact that the election comes at a time of serious economic crisis is, of course, also a disadvantage for Donald Trump. Nevertheless, he can make some points in his favour: Since the end of the severe lockdown measures, the US economy has recovered at an impressive pace. A few days before the election, the Bureau of Economic Analysis will publish its first estimate for economic growth in the third quarter, and if the available indicators are not misleading, it will be an increase of about 7 percent compared to the second quarter. This upswing has now also reached the labour market: The number of people in employment has risen by more than 10 million since April and the unemployment rate has fallen well below the 10% mark. So Trump's calculation of pressing for a quick end to the lockdown measures and chalking up the economic recovery as a personal success could work out.
However, there are also results that clearly speak against the incumbent: Despite the impressive growth in the third quarter, economic output is still 5 percent below the previous year's figure. The current economic indicators also signal a clear flattening of the recovery. According to calculations by FERI, the US economy was still growing very quickly until July, but since August the pace of recovery has slowed considerably. And this, too, is making itself felt on the labor market: The number of those who have lost their jobs permanently has recently risen sharply to more than 2 million people. The number of first-time applications for unemployment benefits has levelled off at between 800 and 900 thousand for several weeks, more than at any time in recent decades. Employment in the leisure sector is a quarter below the level before the outbreak of the Corona pandemic. The still high number of new infections should ensure that demand for services remains subdued. The prospects for a further rapid increase in employment are therefore very low.
The greatest long-term burden on the US economy, however, is its excessive debt. Government debt already exceeds 140% of GDP and, in the long term, carries the risk that the US dollar will lose its leading role in the global financial system. Neither Trump nor Biden are expected to come up with any solutions, and the issue is likely to play a minor role for most Americans in the November 3rd election.