US Economic Survey, Mid-Year 2020

Key Takeaways

  • 2020 GDP forecast -5.5% for 2020 (median forecast, 4Q/4Q); 2021 +4.7%
  • Economists do not expect the Fed to take its target interest rate negative

Setting the Scene

The emergence of the global pandemic COVID-19 in the first quarter of 2020 has created a severe economic and capital markets shock. In an unprecedented move, federal, state and local governments purposely shut down economic activity to prevent the spread of the virus. Everything from restaurants to theme parks to manufacturing plants closed, and people self-isolated in their homes. According to the official data provided by the Bureau of Labor Statistics (BLS), more than 23 million jobs have been lost, with the reported U3 unemployment rate at a record-high 14.7% in April.  However, the U6 statistic (a broader measure of underemployment) painted an even bleaker picture in April: over 36 million unemployed, for a 22.8% unemployment rate.

Source: St. Louis Fed


Source: St. Louis Fed

Yet, even U6 may not fully capture the extent of the pain. Betsey Stevenson, currently a Professor of Economics and Public Policy at University of Michigan’s Gerald R. Ford School of Public Policy and formerly a member of the Council of Economic Advisers and Chief Economist of the U.S. Department of Labor, indicated April data included some incorrect classifications. “Interviewers were told to classify people who were employed but absent from work due to COVID-19 related reasons as temporarily unemployed. Many did this incorrectly – correcting for this error raises the [U3] unemployment rate to nearly 20%.” With these miscalculations and backlogs in registering unemployment claims in many states, the shadow unemployment number could be closer to 30%.

In light of these economic dislocations, we have switched up the format of the semi-annual survey of our Economic Advisory Roundtable members. Typically, we would compare movements in current forecasts to the last survey. However, with broad agreement that the U.S. is already in a recession, numbers have fallen off a cliff (or skyrocketed for metrics like the unemployment rate) and comparisons to prior forecasts have become irrelevant. The world has changed, and so must this survey.

We are now asking questions like will the Fed take its target interest rate into negative territory? What shape of economic recovery will the U.S. experience (swoosh-shaped, V-shaped, W-shaped)? What are longer-term expectations for interest rates and GDP growth? In other words, what might be the new normal and when will we get there?

Recapping Pre COVID-19 Forecasts

Before digging into this year’s survey results, we recap highlights from our December 2019 survey:

  • GDP growth estimate for 2020 was 1.8% (median forecast, 4Q/4Q)
  • Top factors affecting economic growth: trade policy, business confidence & private credit market conditions
  • Top risks to economic forecasts: trade/tariffs and global growth for both the up and downside
  • The probability of a recession in the next 12 months was 25% on average (high 65%, low 10%)
  • Economists expected the unemployment rate to tick up slightly to 3.7% in 2020
  • 50% of respondents believed the Fed’s next rate move would be up (44% down, 6% on hold)
  • Economists expected inflation (measured by the PCE deflator) to increase to 2.1% in 2020
  • 57% of respondents noted the Phase 1 trade deal with China would prevent future tariffs (36% not enough information, 7% no change); 80% of respondents expected the final deal to be light (eliminating tariffs/reducing U.S. trade deficit), with 13% no deal and 7% full (including IP protection)

In summary, while there were concerns around slowing global economic growth, the U.S. economy was holding up well. Trade and tariffs were top of mind, not labor market conditions or plummeting into a recession. And then came COVID-19.

2H20 Survey Results Summary

Unsurprisingly, both the current and forecasted GDP numbers now show an expectation that 2020 is headed for the deepest recession on record (-5.5% 4Q/4Q), with the U.S. not recovering fully by the end of 2021 (4.7% 4Q/4Q). To be sure, 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 state and local economies have begun to open, but what will the new normal be? Will customer preferences have permanently shifted? How will businesses need to readjust? 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 (populated between April 30 and May 28):

Economic Growth

  • 77% of economists expect a swoosh-shaped economic recovery, followed by 9% for both V-shaped and U-shaped
  • 43% of respondents expect nominal GDP to return to its pre COVID-19 level (in relation to 4Q19) by the end of 2022
  • 77% of economists expect 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 (i.e. COVID-19 is not expected to have long-term effects)

Interest Rates

  • Will the U.S. follow other countries and regions into negative rate territory? 100% of respondents said no
  • Top factors impacting the Fed’s rate decision: labor impact of COVID-19, large scale return to work, and if there is a second wave of COVID-19
  • 86% of economists think rates will not begin to normalize until after 2021

Trade Policy

  • 45% said the focus will return to tariffs and trade negotiations by 2021; 40% said 2H20 if there is not a second wave of COVID-19
  • 50% of respondents expect no trade deal between the U.S. and China, followed by 45% expecting a light deal (eliminating tariffs) and 5% expecting a full deal (IP protection)
  • Will negative sentiments around China’s handling of COVID-19 impact future trade negotiations? 55% of economists responded ‘significantly,’ followed by 40% ‘somewhat.’ 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 26 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 April 30 and May 28.


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
  • 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