by Calculated Risk on 12/11/2020 11:34:00 AM

Economic activity in the fourth quarter is dependent on the impact of the pandemic. With the number of new cases per day of COVID over 200,000, hospitalizations at record levels (over 100,000), and deaths per day at new record highs (over 3,000 the last two days), it is clear that economic activity will slow in December.  Most of the slowdown will be related to individuals being more cautious, and some will be related to government actions. 

Initial unemployment claims for last week showed a sharp increase to 853,000, suggesting that layoffs are increasing.  The current week is the BLS reference week for December, and with the new restrictions on activity, it seems likely there will be another sharp increase in layoffs this week (reported next Thursday).  

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.  No one expects a lockdown like at the end of March and in April, but 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 9 estimate]

From Merrill Lynch:

We continue to track 33.1% for 3Q GDP and 6.0% for 4Q GDP. [Dec 11 estimate]

From the NY Fed Nowcasting Report

The New York Fed Staff Nowcast stands at 2.5% for 2020:Q4 and 5.9% for 2021:Q1. [Dec 11 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 11.2 percent on December 9, unchanged from December 4 after rounding. [Dec 9 estimate]