Not everything that goes up is a good thing. To be sure, the rise in COVID-19 cases in key states is a worrisome trend, and we watch it daily. We also watch COVID-related deaths in the states and for the country as a whole. A significant second wave, with key states going back into economic shutdown, is our stake in the ground. If that happens, there will be a spate of new forecasts coming your way.
While we wait and see regarding a second wave, there have been some key developments in the economic indicators. These changes bode well for our GDP forecast, which calls for stability and the stirrings of recovery in the third quarter of this year followed by more improvement in the last quarter.
The newest indications of near-term recovery are found in New Orders data released by the Census Bureau in its advanced report. We have tentative April 2020 1/12 lows in Nondefense Capital Goods New Orders (excluding aircraft) and New Orders for Durable Goods. One month doesn’t make a trend, but these 1/12 lows would be consistent with leading indicator input, and, therefore, are encouraging input regarding our forecast for the rest of the year.
Other trends are going up, and they are definitely good news in terms of the economy:
- Weekly Economic Index from the Federal Reserve Bank of New York
- Weekly Index for Retail Sales Activity
- US Intermodal Rail Traffic – a great measure of demand
The economy is encouraging; the number of coronavirus cases and government reactions pose the greatest risk to the forecast. Please stay in touch -- subscribe to our free updates.