This Week's State Of The Economy - What Is Ahead? - 29 May 2020

By: Taro Chellaram /Wells Fargo Economics & Financial Report/May 30, 2020

This Week's State Of The Economy - What Is Ahead? - 29 May 2020

U.S. - The U.S. Economy Appears to Have Bottomed in April

  • The beginning of this week saw some optimism that the economic downturn could be relatively short-lived, but data through the rest of the week provided grim reminder of the economic damage from COVID-19.
  • Jobless claims declined for the eighth straight week, but continuing claims posted their first decline during the pandemic period, a positive signal for the labor market.
  • The second estimate of Q1 U.S. output revealed a slightly worse decline in real GDP. Q2 will be much worse.

 

Global - Keep Looking Forward, Don’t Look Back

  • Q1 GDP for the OECD economies, which includes most developed economies, fell 1.8% quarter-over-quarter and 0.8% year-over-year. Considering the slowdown seen in emerging economies such as China, India and Brazil, we expect the decline in Q2 GDP for the G20 economies to be even larger.
  • Some modestly encouraging signs are starting to emerge. PMI surveys across many countries improved in May, as did German IFO business confidence and Eurozone economic confidence.
  • That said, with the outlook still somewhat uncertain, we expect the ECB to ease monetary policy further next week.



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