Daily Spotlight

Our First GDP Look into 2021

Since the current economic expansion began in the fourth quarter of 2009, the economy has grown for 40 quarters in a row. In the post-World War II era, the U.S. has experienced 10 periods of economic growth, which have averaged 20 quarters, or five years. The longest expansion had been 39 quarters; the shortest was five. Can the outlook be for continued growth for the current economy, which is now the longest on record? Well, as we have frequently said, expansions don't die of old age, but rather from problems that emerge as they evolve. Looking into 2021, we are forecasting continued growth, as we think the positives in the economy (low interest rates, rising stock market, low jobless claims) can outweigh the negatives (trade wars, geopolitical developments, relatively flat yield curve, slowdown in PMI new orders). But we do expect the growth rate to slow in the first half of 2020, before the impact of the Fed's three rate hikes kicks in. For the year 2019, we forecast that overall growth will average in the 2.3% range, down from the 2.5% average in 2018. Our forecast for 2020-21 GDP growth is 2.0%. We expect to see quarterly growth rates range between 1.5% and 2.5% over the next few quarters. ...  from problems that emerge as they evolve. Looking into 2021, we are forecasting continued growth, as we think the positives in the economy (low interest rates, rising stock market, low jobless claims) can outweigh the negatives (trade wars, geopolitical developments, relatively flat yield curve, slowdown in PMI new orders). But we do expect the growth rate to slow in the first half of 2020, before the impact of the Fed's three rate hikes kicks in. For the year 2019, we forecast that overall growth will average in the 2.3% range, down from the 2.5% average in 2018. Our forecast for 2020-21 GDP growth is 2.0%. We expect to see quarterly growth rates range between 1.5% and 2.5% over the next few quarters.   more

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