U.S. Macro Outlook Q4 2019

by Matt Mullen | Mar 24, 2020

The pace of U.S. economic growth moderated in 2019, to an annual rate of 2.3%. Although the underlying details suggested growth was poised to slow a bit in 2020, especially from slower business investment, some positive factors were materializing in late 2019.Easing monetary policy, rebounding manufacturing sentiment and a resilient consumer were all aligning to maintain U.S. performance.

But this was before COVID-19. In early March, CBRE EA lowered its expectations for U.S. GDP growth to 1.3% for 2020, down from a previously estimated 2.0%. Now it is likely the economy will flatline this year as contracting activity in H1 2020 is followed by a bounce back in Q3. This deteriorating backdrop has sparked a flight-to-safety among investors, forcing the Federal Reserve (Fed) to take aggressive action.

Job growth in 2019 averaged 178,000 jobs per month, down slightly from 2018’s average of 193,000. The labor market will come under significant strain in coming weeks as many workers, especially non-salaried service employees, forfeit hours and wages.

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