I’m tracking new cases, hospitalizations and deaths due to COVID, mostly to assess the impact on the economy.
Just over a month ago, many Americans, and economic analysts, assumed COVID was mostly behind us. Unfortunately they were wrong, and COVID has impacted the economic outlook once again.
For example, on July 30th, Goldman Sachs wrote: “we are launching our Q3 GDP tracking estimate at +9.0% (qoq ar)”
Then in mid-August, they downgraded their forecast: “We have lowered our Q3 GDP forecast to +5.5%, reflecting hits to both consumer spending and production.”
And this week, on September 6th, they downgraded their forecast again: “We now expect GDP growth of 3.5% in Q3.” That is about one third of the real growth they expected just 5 weeks ago!
Other analysts have made similar downgrades for Q3. There are several reasons for the change: the surge in COVID cases has impacted some consumer spending, supply chain disruptions are ongoing (and COVID is impacting the supply chain recovery), and possibly some downgrades due to policy (expiration of unemployment benefits during a COVID wave).