2020 U.S. Economic Forecast Upgraded Despite Heightened Risks

Wednesday, September 16th, 2020

 Despite continued downside risks, full-year 2020 real GDP is now forecast to contract by 2.6 percent, an improvement from the prior month's forecast of a 3.1 percent contraction, according to the latest commentary from the Fannie Mae (OTCQB: FNMA) Economic and Strategic Research (ESR) Group. The upgrade was attributed to continued strength in consumer spending – and data suggesting that such spending is likely to support economic growth through the remainder of the year. In fact, the ESR Group also improved its forecast for real GDP growth for the third quarter 2020 to 30.4 percent – from the prior forecast of 27.2 percent – but reduced its expectations for fourth quarter growth to 6.2 percent from 8.7 percent due in part to the lack of further COVID 19-related legislative stimulus. Risks to the forecast remain skewed to the downside, including the potential for a re-acceleration nationally of COVID-19 cases, a slowdown in global growth, and consumer retrenchment owing to diminished unemployment benefits and the expiration of federal relief programs. To the upside, many households continue to save at elevated levels and appear to have the means to offer additional support to the economy through increased spending.

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