Ruff going for GDP: What can be seen from the latest data?

KPMG reviews the path for the economy from the impact of COVID-19.

November 02, 2020

Please download the latest chart book, Ruff going for GDP: What can be seen from the latest data?

KPMG’s Office of the Chief Economist is continuously monitoring key developments in this unprecedented situation and refinements to the economic model occur daily. To learn about our current scenario analysis, including deep background on the underlying cause and effect dynamics, please download our latest report, Ruff going for GDP: What can be seen from the latest data?

  • The pandemic is both a supply shock and a demand shock with the demand shock dominating economic activity.
  • The demand shock has adversely impacted services consumption in Q3 due largely to Fear of Going Out (FOGO) inhibiting the demand for in-person activities at the same scale as prior to the pandemic.
  • The demand shock has positively impacted goods consumption in Q3, due largely to FOGO increasing the demand for home improvements as well as fiscal assistance that boosted consumption of big ticket items such as autos.
  • The demand for goods is unlikely to be sustained at the Q3 pace while the demand for services is at risk in the U.S. and Europe as the number of virus cases and deaths continue to rise.
  • An additional fiscal stimulus is needed to shore up the firewall around the COVID impacted parts of the economy.

Due to the rapidly evolving nature of this situation, we update this analysis frequently. Please check back often for our latest report.

Constance L  Hunter

Constance L Hunter

Principal and Chief Economist, KPMG LLP

+1 212-954-3396

Research highlights 

Explore key findings from our latest economic analysis

Long path to pre-pandemic levels of GDP

COVID-19 Pandemic Causes Largest Real GDP Drop in History 
U.S. Recession Cycles Indexed to Start of Recession

  • The economic firewall created by the CARES Act assumed COVID-19 would be under control by Q3 2020.
  • With COVID-19 cases rising in the U.S. and globally, a firewall to prevent larger economic fallout from the parts of the services economy still impacted is needed to prevent spillovers to services where workers can work from home as well as the goods economy.
  • Based on current data, the swoosh shape recovery is the best case scenario.
Retail sales have rebounded from -5.0% to +3.0% y/y

Unprecedented decline in service sector due to COVID-19

COVID-19 Unusual Shock to Services 
U.S. Real Services Consumption Indexed to Start of Recession

  • Normally in recessions, the growth of services consumption slows but it does not decline below pre-recession levels.
  • This is because demand for many services, such as utilities and healthcare, is maintained even if unemployment is high, largely due to a broad social safety net. — During the pandemic, health care services consumption has dropped along with the consumption of many other services such as restaurants and in-person entertainment.
  • Much of this consumption will only return if we get a handle on the virus.
Building a firewall around the COVID-19 impacted economy

Pandemic has shifted where people spend their time

United States: Change in Visits to Community Areas 
Change Relative to Jan 5 - Feb 6 Baseline 

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