This Week's State Of The Economy - What Is Ahead? - 30 October 2020

By: Taro Chellaram /Wells Fargo Economics & Financial Report/Oct 27, 2020

This Week's State Of The Economy - What Is Ahead? - 30 October 2020

U.S. - GDP Bounces Partway Back in Q3

  • Real GDP jumped a record 33.1% during Q3, beating expectations. A 40.7% surge in consumer spending drove the gain. However, real GDP is still 3.5% below pre-pandemic levels.
  • Initial jobless claims dropped to 751k for the week ending October 24, the lowest level since mid-March.
  • Durable goods orders rose 1.9% in September, well above consensus estimates. In addition, new home sales fell 3.5% to a still-blistering 959K-unit pace.
  • Consumer confidence edged down to 100.9 in October. Rising COVID cases may weigh on confidence in the months ahead.

 

Global - Renewed Questions Surrounding Global Recovery

  • Eurozone Q3 GDP jumped more than 12% quarter-over-quarter, although that bounce did not fully recover declines from earlier this year. More concerning going forward is the renewed spread of COVID and clear signs of softening in service sector activity. Thus while the European Central Bank held monetary policy steady this week, it gave a clear signal further easing should be expected in December.
  • In Canada an encouraging economic rebound continues, in turn prompting the central bank to stay on hold. Mexico’s Q3 GDP jumped after a large Q2 fall, while South Korea’s Q3 GDP gain was led in large part by export growth.



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