by Calculated Risk on 12/18/2020 11:18:00 AM

Economic activity in the fourth quarter is dependent on the impact of the pandemic. With the number of new cases of COVID over 200,000 per day, hospitalizations at record levels (over 104,000), and deaths per day at new record highs (almost 3,500 each of the last two days), it appears that economic activity has slowed in December.   

Initial unemployment claims have increased sharply over the last two weeks, suggesting that layoffs have increased.  Last week was the BLS reference week for December, and the increase in weekly claims suggest a weak employment report for December.  

However, economic activity was solid in October, and that would suggest PCE growth of close to 6% in Q4, even if November and December see no month-over-month growth.  It is possible that activity slowed in November and will decline in December.

From Goldman Sachs:

We left our Q4 GDP tracking estimate unchanged at +5.0% (qoq ar). [Dec 17 estimate]

From Merrill Lynch:

We revise up our 4Q20 GDP forecast to 5.0% qoq saar from 4.0% previously, marking to market with our latest tracking estimate. This lifts our 2021 annual forecast by a tenth to 4.6% while 2020 remains at -3.5%. [Dec 18 estimate]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.4% for 2020:Q4 and 5.6% for 2021:Q1. A negative surprise from retail sales data more than offset positive news from housing sector data in both quarters. [Dec 18 estimate]

And from the Altanta Fed: GDPNow

The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2020 is 11.1 percent on December 17, up from 11.0 percent on December 16. After this morning's housing starts report from the U.S. Census Bureau, the nowcast of fourth-quarter real residential investment growth increased from 31.0 percent to 33.1 percent. [Dec 17 estimate]