Expectations React Strongly to Angela Merkel’s Covid Statements

Most economic actions are future-oriented and anticipate future developments. For this reason, science and politics pay close attention to the expectations of people who are active on the supply and demand side of the markets. If these expectations are optimistic, economic activity picks up. In the current situation, there is a similar pattern in a different context: the public eagerly awaits politicians’ announcements about what measures will be taken or relaxed to combat the Covid pandemic. These announcements will also potentially influence the expectations of market participants. In order to measure the impact of political announcements, households in Germany have been surveyed daily since April 2 on their expectations about how long the current restrictions on public life will last and whether they are planning any major purchases of consumer goods in the coming months. An initial evaluation of the data collected between April 2 and 20 provides clear indications that political announcements had a strong and significant influence on how expectations developed.