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Recent data imply third-quarter real GDP growth near 30%,
stronger than we anticipated previously. This encouraged us to
upwardly revise our forecast for growth in 2020 from -4.8% to
-4.0%. However, after the third quarter we expect GDP growth to
fade, as catch-up spending wanes, federal and state and local
fiscal support dissipates and stubbornly high COVID-19 infection
rates leave states cautious about re-opening their economies and
encourage continued caution by consumers and business independent
of official containment measures. We project GDP to surpass its
previous peak in early 2022, and the economy to regain full
employment in 2023.
Our forecast assumes emergency unemployment benefits of $300/week
are extended from September through December, and another round of
checks is sent to households this fall. The recovery will be at
renewed risk early in 2021 when this income support expires.
However, we assume a vaccine becomes available in mid-2021,
allowing a more viable recovery to finally then take hold.
Posted 08 September 2020 by Chris Varvares, Vice President and co-head of US Economics, IHS Markit and
Joel Prakken, Ph.D., Chief US Economist and co-head of US Economics, IHS Markit
