Consumer recovery has shown early strength but the outlook is for slower gains; housing remains red-hot

摘要

Consumer markets: Consumer spending is projected to increase 38.5% (annual rate) in the third quarter, 8.2 percentage points higher than in our prior forecast. This upward revision is more a function of the stronger initial recovery through July than an improved economic outlook for consumers. High-frequency data show that consumer spending stalled in August amid elevated numbers of COVID-19 cases and lapsing federal income support for unemployed persons. The labor market recovery has throttled back as more job losses become permanent, while store closures and bankruptcies are also becoming tangible. Consumer sentiment is barely above its April nadir as a result. These developments point to a fading recovery over the next several quarters; real PCE is forecast to increase at just 2.3% in the fourth quarter and 1.7% in the first quarter of 2021, before accelerating when a vaccine becomes available. Real PCE is forecast to surpass its pre-pandemic peak (as of fourth quarter 2019) in early 2022.