Prior to COVID-19, 2020 was expected to be a weaker year due to delayed business investment and slower job growth and household spending. But now COVID-19 has forced us to revise our annual outlook down further.

Before COVID-19, growth was poised to slow a bit in 2020, especially from slower business investment, and some positive factors were materializing in late 2019. In mid March, CBRE EA lowered its expectations for U.S. GDP growth to 0.4% for 2020, down from a previously estimated 2.0%. Specifically, we expect the economy will contract in H1 2020 followed by a bounce back in Q3. This deteriorating backdrop in the near-term has sparked a flight-to-safety among investors, forcing the Federal Reserve (Fed) to take aggressive action.

Aggressive stimulative action is unlikely to stem the economic slowdown this year. As key components of the U.S. economy literally shut down in Q1 and Q2 2020, GDP will materially contract in coming months. However, reduced demand during H1 2020 will result in stronger growth for H2 2020 and 2021 as some capital outlays are delayed.

CBRE forecasts growth below the estimated long-term trend—near 2%—with U.S. GDP growth between at 1.5% and 2% in 2020 and 2021. Importantly, we will avoid a recession, absent unforeseen shock s, primarily due to monetary stimulus and healthy consumer sentiment.

We now anticipate an extended period of low but positive economic growth preceding a pick-up in H2 2021. We still expect some shrinkage in employment during 2021, as the economy slows, but less than we had previously.

Given the persistent business uncertainty, slower global growth, lagged effects of tighter monetary policy, and ongoing trade tensions, our growth forecast for the U.S. for 2019 remains unchanged from last quarter.

Economic growth to remain healthy in 2019, moderating slightly. Job gains likely to slow as pool of available labor shrinks.

Economic growth should moderate in 2019, but remain reasonable, driven by the remaining impact of fiscal expansion, the capital spending cycle and high consumer confidence.

Our baseline Q2 2018 forecasts remain largely unchanged from last quarter. While growth in the first half of 2018 was particularly strong, growth in the second half will likely moderate as financial conditions become tighter and the one-time effects of the export surge during Q2 likely begin to fade.

Our baseline forecasts for Q1 2018 remain largely unchanged from last quarter. We expect the government’s fiscal stimulus to boost growth, though gains are modest given that the economy is operating at near-capacity.