Virus trajectory influences outlook
Lockdowns Threaten Economic Recovery
While the U.S. economy continues to rebound from the pandemic’s effects, a resurgence in coronavirus cases may threaten the positive path. Key economic indicators remain strong, including manufacturing, home prices, employment and consumer spending. But renewed lockdown measures, combined with uncertainty surrounding additional fiscal aid and consumer confidence, remain risks. With vaccines on the horizon, we expect growth to improve in 2021.
Europe Faces Another Downturn
After rebounding from a record economic decline in 2020’s second quarter, Europe faces the prospect of another downturn amid coronavirus-related closures and curfews. Similarly, the U.K.’s economy continues to struggle with a rise in infections and new lockdowns. The looming deadline to forge a trade agreement with the eurozone is also adding to the economic uncertainty. We expect growth in Europe and the U.K. to return to pre-virus levels in late 2021 or early 2022.
China's Recovery Bucks Global Trends
Strong domestic demand and export growth, along with central bank accommodations, aided China’s economic recovery. China remains the only major economy likely to report economic growth for 2020. Nevertheless, ongoing trade tensions with the U.S. and Europe likely will continue to create economic headwinds. Rising COVID-19 infection rates worldwide, along with deglobalization trends, may also pressure China’s growth.