Forecast Update: March 23, 2020

Seven states (and climbing) have issued shelter-in-home orders and shut down “nonessential” businesses. This is going to contribute to a wave of layoffs and create a level of uncertainty that we had not adequately built into the forecast you saw ITR Economics present last week.

The general thrust of our messaging from last week remains in place. This is not turning into a redux of the Great Recession. News accounts advocating that the world is teetering on the brink of a Great Depression are inflammatory at best.

The changes:

• We have universally lowered the outlook for 2Q20.
• We are building into our GDP and US Total Industrial Production forecasts a 3Q20 low in the quarterly data. Their 12/12 rate-of-change and 12MMA lows will occur in early 2021.
• Retail Sales are now expected to slip below the year-earlier level through the remainder of 2020.

The constants:

• The trend ahead of us is not a redux of the Great Recession.
• The downturn remains relatively normal in duration.
• A recovery trend is probable for 2021.
• Not all businesses will be impacted the same way and/or on the same timeline.
• The size of the monetary and fiscal policy stimuli will no doubt help.

The orders to shut down businesses and the shelter-in-home mandates will likely be debated for a long time. The reasonableness of these actions will forever be a function of your perspective. A debate at this time is moot. It is incumbent upon business leaders to work the plan to not only navigate the near-term decline, but also position their businesses for maximum performance in the next rising trend.

Brian Beaulieu
CEO