This Week's State Of The Economy - What Is Ahead? - 28 August 2020

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Aug 26, 2020

This Week's State Of The Economy - What Is Ahead? - 28 August 2020

U.S. - Q3 PCE Rebound in the Cards, Outlook More Uncertain

  • After a revised look at GDP this week suggested the second quarter may not have been quite as bad as first estimated, attention shifts to the current quarter. Fresh data this week shed light on the outlook for consumer spending.
  • The bounce in Q3 consumption is looking better-than expected, though fading confidence and uncertainty about the virus and fiscal policy suggest the strength could quickly fade.
  • FOMC Chair Jerome Powell announced an update to the Fed’s Monetary Policy Framework in his remarks at the Jackson Hole Symposium. For a detailed analysis of how this affects our outlook, please see Interest Rate Watch on Page 6.

 

Global - Q2 GDP Data Plunged Across Most Economies

  • Q2 GDP growth data released this week continued to show severe declines in most developed and emerging markets. Among the G10, Norway’s economy posted a record slump in the second quarter, plunging 6.3% quarter-over-quarter, while the Canadian economy also suffered a record decline, falling an annualized 38.7%. Meanwhile, Mexico’s economy also fell sharply as the COVID-19 pandemic weighed on key industries.
  • The Bank of Korea held its 7-day repo rate unchanged at a record low of 0.50% at its meeting this week. The central bank now looks for the economy to contract 1.3% in 2020, significantly worse than its May forecast.



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