From Deutsche Bank on Sunday:
In the US, fiscal uncertainty is a major issue. As outlined above, we now assume that significant further support will not be forthcoming until after the election. The resulting drop in income support for households is already beginning to depress activity and we see GDP growth slowing to near zero in Q4 as consumer spending slides. Growth will pick up in Q1 with some post-election fiscal support.
Slowing even before the pandemic…
On Friday, the CBO released The Effects of Pandemic-Related Legislation on Output.
Today, we are pleased to present a guest contribution written by Lydia Cox (Harvard University) and Kadee Russ (University of California, Davis), both formerly on the staff of the Council of Economic Advisers.
Source: DB, “Covid-19 impact tracker,” US Economic Perspectives, 17 September 2020.
The map below shows the geographic variation in the decline in nonfarm payroll employment relative to August 2019. Nationwide, the decline is 6.8% (NFP growth was trending at 1.6% up to February 2020, 1.3% up to August 2019).
Statistics released by Wisconsin DWD show nonfarm payroll employment growing in line with US, but — like at the national level — at a decelerating pace.
And the US is fast approaching Italy’s record.
Not good news. Not that it was so great even before this.
There’s been some debate over how low GDP is relative to peak. One has to be particularly careful in calculations because the monthly peak is different than the quarterly peak, according to the NBER BCDC.