This research brief reports how consumption plans and spending propensities were affected at the early stages of the COVID-19 pandemic. An online survey shows that private households have been significantly more cautious in their spending intentions, while the average marginal propensity to spend has remained at an elevated level.

Announcements of policy actions may influence households’ expectations about future individual and aggregate economic outcomes. We show that households have lowered their expectations with regard to the economic situation and that uncertainty about the economy increased during the initial stage of the COVID-19 pandemic. We also show that households who received information on stabilizing monetary and fiscal policy measures, surprisingly, become more pessimistic concerning their future income and GDP growth.

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The October 2020 edition of the Monthly Report analyses developments in the German banking system during the negative interest rate phase and outlines patterns of international business cycles. It also features an article on the protracted rise in real estate prices in Germany from a macroeconomic perspective, taking into account transmission channels and fundamental determinants. Finally, the report explains state government budget figures for 2019.