Deceleration continues, according to some key indicators noted by the NBER’s Business Cycle Dating Committee (BCDC).
Figure 1: Nonfarm payroll employment (dark blue), Bloomberg consensus for September as of 10/1 (light blue square), industrial production (red), personal income excluding transfers in Ch.2012$ (green), manufacturing and trade sales in Ch.2012$ (black), and monthly GDP in Ch.2012$ (pink), all log normalized to 2020M02=0. Source: BLS, Federal Reserve, BEA, via FRED, Macroeconomic Advisers (10/1 release), NBER, Bloomberg, and author’s calculations.
IHS/MarkIt provides a projection of the September GDP number consistent with their forecast for Q3: essentially 0% growth in September.
Source: IHS/MarkIt, October 1, 2020.
So, we are already decelerating rapidly along a number of dimensions, as passage of a pre-election package becomes ever more unlikely. Deutsche Bank’s conditional forecast is zero growth on Q4. With the political — and hence policy — uncertainty possible in the election’s wake, don’t rule out another leg downward in economic activity.
Update, 4pm Pacific:
Reader rjs notes the rapid pace of consumption growth. This jump still leaves consumption 4% (log terms) below 2020M02 levels.
Figure 2: Consumption in Ch.2012$ (blue), and CPI-deflated retail and food service sales (brown), both in logs, 2020M02=0. Source: BEA, BLS via FRED, and author’s calculations.