US Economic Outlook – Q2 contraction steepest since Great Depression
The US economy contracted 32.9% in an annualized qoq basis during the second quarter – the steepest drop on record since the Great Depression. We maintain our baseline real GDP growth outlook of a 6.4% contraction in 2020, and a partial rebound of 4.2% next year. Our GDP recovery trajectory implies that pre-pandemic levels of economic activity wouldn't return until 2023, meaning that the US economy would have effectively lost at least three years' worth of economic growth.
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- We maintain our forecast of a 6.4% real GDP contraction in 2020, with a partial recovery of 4.2% next year.
- Unemployment continues to trend down, however the economy is far from recuperating the 22 million jobs lost between April and May.
- Medical care prices continue to climb during the pandemic, while the energy-related ones are trending down.
- An impasse in Congress has allowed for key unemployment benefits to expire but we expect a compromise.
- Home and vehicle sales are showing signs of strength, and key measures of manufacturing sentiment are back to 2019 levels.