U.S. Macro Outlook Amid COVID-19 - Q1 2020 Updated

by Matt Mullen | Apr 16, 2020
2020 OUTLOOK - THE GLOBAL SLOWDOWN FROM COVID-19 IS NOW DEEPLY ENTRENCHED

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.

However, we expect U.S. economic growth in 2021 to hit 5.6%, well above our previous expectation of 1.7%, as supply chains are rejuvenated and firms move ahead with delayed investment plans. However, some consumer-facing sectors (e.g. hotels, restaurants, and services) will see a permanent revenue loss in H1 2020.

The labor market should see a draconian net decline this year as firms cancel events and suspend operations. Service workers are most vulnerable to seeing a drop in hours worked and wages. Firms with strong balance sheets will attempt to retain staff during the pandemic. Government stimulus for distressed industries will help maintain some employment. Pent-up demand for services will absorb many laid-off workers back into the labor market in H2 2020.

Download the full report here