Insight

Economic Outlook Update: Riding the COVID-Coaster

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

September 24, 2020


Download the latest chart book, Economic Outlook Update: Riding the COVID-Coaster


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, Economic Outlook Update: Riding the COVID-Coaster.


Firewall:

The initial economic firewall built around the COVID-19 impacted parts of the economy needs to be maintained to prevent the economic damage from COVID from having even greater impact on the wider economy. Specifically, maintaining incomes via enhanced unemployment benefits goes a long way to prevent damage in financial intermediation and business survival.


Consumer confidence:

There is no “V” shaped recovery in consumer confidence. Consumers will continue to be cautious until a vaccine and effective treatment for COVID-19 are available.


Housing:

Low rates and Fear Of Going Out (FOGO) are leading to a surge in demand for housing; as people spend more time at home they want a space that meets their COVID-19 needs and this is causing a rise in purchases and home improvement activity.


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

Constance L  Hunter

Constance L Hunter

Chief Economist, KPMG US

+1 212-954-3396

Research highlights 

Explore key findings from our latest economic analysis

Retail sales have rebounded from -5.0% to +3.0% y/y

Retail sales have rebounded from -5.0% to +3.0% y/y

Retail sales have rebounded from -5.0% to +3.0% y/y

Building a firewall around the COVID-19 impacted economy

Building a firewall around the COVID-19 impacted economy

Building a firewall around the COVID-19 impacted economy

Is this time different?

Is this time different? 
  • One of the indicators used by the dating committee is real personal income excluding transfers, this excludes federal and state unemployment benefits, and any other benefits to households such social security or disability payments.
  • Normally unemployment benefits boost income slightly at the outset of a recession and then fall during a recovery.
  • The extraordinary increase in benefits during COVID-19 boosted household incomes more than normal (dotted blue line.) This could provide significant support to consumer, though it risks being depleted in near-term.
Is this time different?

 

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