US Economic Survey, End-Year 2020

Key Takeaways

  • 2020 GDP growth est. -2.5%, 2021 est. +3.5% (median forecast, 4Q/4Q)
  • 2020 unemployment rate est. 6.8%, 2021 est. 5.4% (4Q average)
  • Economists expect GDP to return to pre-COVID-19 levels by 2H21

Setting the Scene

Earlier this year the world changed almost overnight. Along with learning new ways to live and work, the U.S. economy took the sharpest drop into recession on record. The unemployment rate increased 10.3 pps to 14.7%, the highest rate and largest month-over-month increase in the history of the series, according to the U.S. Bureau of Labor Statistics (BLS). The number of people unemployed rose to 23.1 million (+15.9 million to pre-COVID levels).

As we head into the end of the year of COVID-only forecasts, there are clear statistical signs of the economic recovery. The U.S. recovery since the lockdowns has been strong, boosted by fiscal stimulus (a significant contributor to 2Q20 GDP, contributing to a lesser extent in 3Q20) and outperformance in some sectors of the economy, such as online retail sales and home sales. The economic recovery, as depicted by growth in real GDP, has clearly been in a V- shaped pattern:

The U3 unemployment rate has come down substantially to 6.7% in November, -8.0 pps from the April peak of 14.7% but still 3.2 pps higher than February levels. There are now 10.7 million people unemployed, down from 23.1 million in April but 4.9 million higher than in February.

However, we are not out of the woods yet. While the unemployment rate has come down, the labor force participation rate (LFR) has also declined. The LFR was 61.5% in November, +1.3 pps from the April low but down 1.9 pps from February levels. Additionally, the November employment release may not truly represent the current employment environment, as the recent round of lockdowns only started at the later end of the month.

Further, the recovery has not been equal across all segments of the economy. Service areas affected by social distancing, whether forced by lockdowns or driven by fear of the virus (travel, entertainment, hospitality, etc.), continue to struggle. Conversely, other areas have flourished, such as some technology companies, plays on the migration to the suburbs from urban centers and various physical, mostly delivered goods (online retail, grocery, used cars, home sales, etc.).

Recapping Early COVID-19 Forecasts

Before digging into this year’s survey results, we recap highlights from our June 2020 survey:

  • GDP growth estimate for 2020 was -5.5% and +4.7% for 2021 (median forecast, 4Q/4Q)
  • Top factors affecting economic growth: COVID-19 was on the top of the list, followed by business confidence and then private credit markets
  • Top risk to economic forecasts: COVID-19 vaccine/2nd wave for both the up and downside
  • 77% of economists expected a swoosh-shaped economic recovery, followed by 9% for both V-shaped and U-shaped
  • 43% of respondents expected nominal GDP to return to its pre COVID-19 level (in relation to 4Q19) by the end of 2022
  • 77% of economists expected the long-term potential GDP growth rate is between 1.5% and 2%, with 55% stating this has not changed from pre COVID-19 estimates
  • Economists expected the elevated unemployment rate to end the year at 9.5% in 2020 and 7.2% in 2021 (4Q/4Q)
  • 100% of respondents said the U.S. won’t take its target rate into negative territory; if so, estimates were split 50%/50% as to timing, further out in 2020 or not until 2021
  • 86% of economists thought rates would not begin to normalize until after 2021; top factors included labor impact of COVID-19, large scale return to work, and if there was a second wave of COVID-19
  • Economists expected inflation (PCE deflator) to decrease to 0.3% in 2020 (core PCE deflator 0.9%); top factors in the core inflation outlook were COVID-19 recovery time and economic slack/unemployment
  • 41% of respondents expected a 15% to 25% probability for deflation in the next two years; 45% of respondents expected a 0% to 15% probability for structurally higher inflation over the long run

In summary, COVID, COVID, COVID. In our mid-2020 survey, the economic recovery was viewed as highly dependent upon the delivery of a viable vaccine on a widescale basis, which would enable consumers and businesses to return to some sort of pre-COVID normal behaviors.

2H20 Survey Results Summary

2020 marked the deepest recession on record in the U.S. While economic growth is expected to recover fully by the end of 2021 (estimated at 3.5% 4Q/4Q), forecasting during crisis times is difficult at best. There are too many unknowns, and what we think we know appears to change daily. The majority of states and local economies have opened to some degree, but what will the new normal be? Will customer preferences have permanently shifted? Will businesses need to make enduring adjustments? What portion of the jobs lost will become permanent? In addition to the demand side, fundamentals factors are shifting on the supply side as well.

Therefore, instead of comparing to past numbers, we asked our Roundtable of economists to provide their best assessment of a new normal and when we can get there. We highlight the following from the survey:

Economic Forecasts

  • 2020 GDP growth expected at -2.5% (median forecast, 4Q/4Q); 2021 expected at 3.5%
  • On a quarterly basis, 1Q21 GDP growth expected at 2.6% and 2Q21 at 4.2% (Q/Q, SAAR)
  • Unemployment rate forecasted to end 2020 at 6.8%, falling in 2021 to 5.4% (4Q average)

Economic Recovery

  • When building their forecasts, 59% assumed a vaccine would begin to be disseminated to the broad population by 1Q21
  • In terms of the shape of GDP growth recovery, 53% of survey participants responded Swoosh-shaped recovery, followed by 20% W-shaped (a double-dip into recession); when looking at the business outlook this changes to 57% Swoosh-shaped and 29% K-shaped
  • Economists expect GDP to return to its pre-COVID-19 level (in relation to 4Q19) by 2H21
  • 81% of economists expect the long-term potential growth rate is between 1.5% and 2%, with 47% stating this is somewhat lower compared with pre COVID-19 estimates

Life after COVID

  • 57% of respondents expect the labor force participation rate not to return to the ~63% pre-COVID average until the end of 2022, followed by 29% expecting it in 2H22
  • Once a vaccine is distributed en masse, 38% of Roundtable economists expect consumers to approach high-density activities at increased but nowhere near pre-COVID-19 levels and another 38% expect it to return to pre-COVID-19 norms
  • 56% of respondents expect employees never to return to the office at pre-COVID levels, followed by split but equal responses for either in 2H21 or 2H22, 19% of respondents each answer

Fed Actions

  • Respondents indicated that should the Fed need to provide more policy accommodation, the top tool will be asset purchases/balance sheet (75%)
  • Only one respondent replied the Fed would embark on Yield Curve Caps/Control (YCC) and they expect it in 1H21
  • 100% of Roundtable economists said the U.S. will not take its target rate into negative territory

 Trade Policy

  • 53% said the focus will return to tariffs and trade negotiations by 2H21; 27% said beyond 2021
  • 57% of respondents expect a light trade deal (eliminating tariffs) between the U.S. and China, followed by 36% expecting no progress after Phase 1 and 7% expecting a full deal (IP protection)
  • Will negative sentiments around China’s handling of COVID-19 impact future trade negotiations? 57% of economists responded somewhat, followed by 36% not at all. None believe that it ends all chances of negotiation

Full Report

Continue reading for all survey results, more charts and a reference guide on the U.S. economic landscape.


About This Report

The SIFMA Economic Advisory Roundtable brings together Chief U.S. Economists of 27 global and regional financial institutions. This semiannual survey compiles the median economic forecast of Roundtable members, published prior to the upcoming Federal Open Market Committee (FOMC) meeting. We analyze economists’ expectations for: GDP, unemployment, inflation, interest rates, etc. We also review expectations for policy moves at the upcoming FOMC meeting and discuss key macroeconomic topics and how these factors impact monetary policy.

Note: The survey was populated between November 18 and December 3.


SIFMA Economic Advisory Roundtable Chair

  • Ellen Zentner, Morgan Stanley & Co., Inc.

SIFMA Economic Advisory Roundtable

  • Ethan Harris, Bank of America-Merrill Lynch
  • Michael Gapen, Barclays Capital Inc.
  • Nathaniel Karp, BBVA Compass
  • Mickey Levy, Berenberg
  • Douglas Porter, BMO Financial Group
  • Andrew Hollenhorst, Citigroup
  • Nicholas Van Ness, Credit Agricole
  • James Sweeney, Credit Suisse AG
  • Michael Moran, Daiwa Capital Markets America, Inc.
  • Peter Hooper, Deutsche Bank Securities Inc.
  • Christopher Low, FTN Financial
  • Jan Hatzius, Goldman Sachs & Co.
  • Aneta Markowska, Jefferies & Co., Inc.
  • Michael Feroli, J.P. Morgan Chase & Co.
  • John Lonski, Moody’s Analytics, Inc.
  • Troy Ludtka, Natixis
  • Michelle Girard, NatWest Markets Securities, Inc.
  • Lewis Alexander, Nomura Securities International, Inc.
  • Carl Tannenbaum, Northern Trust
  • Augustine Faucher, PNC Financial Group
  • Scott J. Brown, Raymond James & Associates, Inc.
  • Tom Porcelli, RBC Capital Markets, Inc.
  • Stephen Gallagher, Societe Generale Corporate and Investment Banking
  • Lindsey Piegza, Stifel Financial Corp.
  • Seth Carpenter, UBS Investment Bank
  • Jay Bryson, Wells Fargo Securities, LLC


  • Katie Kolchin, CFA, Director of Research
  • Justyna Podziemska
  • Ali Mostafa