With Democrats set to hold a majority in both chambers of the U.S. Parliament, the likelihood of further coronavirus aid in the U.S. is increasing, reports Dr. Ulrich Stephan, chief investment strategist for private and corporate clients at Deutsche Bank, in a recent letter.

USA: Deutsche Bank expects growth stimulus
USA: Deutsche Bank expects growth stimulus

Package of measures expected to exceed $1 trillion

He said he expects the new administration under President Biden to launch new measures worth nearly $1 trillion before the end of the first quarter. In addition to an increase in the already approved cash transfers to up to $2,000 per eligible person – so-called stimulus checks – these are likely to include, above all, an increase in government unemployment benefits.

Weak US labor market

The weak labor market report last Friday provided sufficient arguments. The associated increase in the purchasing power of private households should lead to more consumption and a strong growth impetus for the US economy in the new year.

Economic output back to pre-crisis level in second quarter

Economic output could return to pre-crisis levels as early as the second quarter. The additional growth should provide further tailwind for selected cyclical stocks in particular, which should still have catch-up potential compared with growth stocks.

Source: Deutsche Bank

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