The discussion around economic growth going forward will be somewhat difficult and definitely misleading. The current Bloomberg consensus on third quarter growth in gross domestic product is 18% (RSM’s forecast is 14.2%), and that will likely be brought down noticeably in the coming days.
The economy has moved sideways over the past six weeks and looks as if it is stalling. Through July 19, U.S. household consumption has declined by 6.4% relative to January levels, with upper-income consumers reducing spending by 9.8%, middle-income consumers by 5.3% and lower-income consumers by 2.3%.
V stands for vaccine, not the shape of the recovery. No vaccine, no recovery.
Should policy support be reduced, the decrease in spending will accelerate and the difference between actual and potential output will remain wide. V stands for vaccine, not the shape of the recovery. No vaccine, no recovery.
The accompanying data visualization from our vantage point illustrates the long and difficult road to recovery. Following the near 33% decline in second-quarter gross domestic product, even an 18% rebound would leave us far short of potential.
For more information on how the coronavirus is affecting midsize businesses, please visit the RSM Coronavirus Resource Center.
