US Economic Outlook – More fiscal stimulus is warranted as long as restrictions continue in place
We have revised our 2020 forecasts for real GDP growth to -4.6% from -6.4% considering stronger than expected data in personal consumption, manufacturing and housing (Figure 1), and for 2021 to 3.8% from 4.2% due to a stronger base at year-end 2020. The stronger economic activity of recent months is the result of the massive and timely policy support early in the crisis, and a quick pace of reopening. That said, the momentum of the rebound is slowing. More fiscal stimulus is warranted if mobility restrictions (regulatory and/or behavioral) continue in place and unemployment remains elevated.
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- We revised our growth forecast due to stronger than expected data in Q3.
- Risk of a double dip increasing with a possibility of negative Q4 growth.
- High income jobs are back, while low income jobs are lagging.
- No further stimulus expected in 2020; new package to come through in 2021.
- Elections to define 2021 fiscal policy, with stronger stimulus support in case of a favorable result for the Democrats.