How are things looking for 2020 4th Quarter?
Thought I would weigh-in on what we might be looking at in terms of economic growth for the fourth quarter for 2020. It gives you insight as to how you should position your business as we close out the year.
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As you can see from the chart below, my forecast for Q3 growth has been seriously upgraded from 15% in August to 32% this month. This third quarter has been a gang-buster growth period coming out of this recession.
Take a look at a recent article I published…
When you take a look at my forecast for Q4, you can see that I am currently forecasting 8.4% growth. This will definitely be above normal growth rates, but will not be any where near the 32% growth rate they I am now forecasting for Q3.
Take a look at a recent headline…
The chart below contains my analysis of consumer spending. I am currently forecasting a continued uptrend in consumer spending. In Q4 it is possible that we could get into positive Year Over Year growth. This is a really important indicator, as 70% of the economy is consumer spending. So this corroborates that our economy is in fact growing.
When I take a look at the manufacturing sector of our economy, it is continuing to accelerate. This only accounts for ~11% of our economy. But the August index came in at a 12 month high. A very good sign. The August reading points to annual GDP growth of +3.9%. See the table of the PMI index for the past 12 months below.
THE LAST 12 MONTHS
| Month | PMI® |
|---|---|
| Aug 2020 | 56.0 |
| Jul 2020 | 54.2 |
| Jun 2020 | 52.6 |
| May 2020 | 43.1 |
| Apr 2020 | 41.5 |
| Mar 2020 | 49.1 |
| Month | PMI® |
|---|---|
| Feb 2020 | 50.1 |
| Jan 2020 | 50.9 |
| Dec 2019 | 47.8 |
| Nov 2019 | 48.1 |
| Oct 2019 | 48.5 |
| Sep 2019 | 48.2 |
The services sector of our economy is also continuing to expand as well. The Services PMI came in at 56.9 August. This is an important sector of our economy, because it accounts for ~70% of our economy. This index reading as of August points to an economy that is growing at the rate of 2.8% on an annual basis. See the table below.
SERVICES PMI™ HISTORY
| Month | Services PMI™ |
|---|---|
| Aug 2020 | 56.9 |
| Jul 2020 | 58.1 |
| Jun 2020 | 57.1 |
| May 2020 | 45.4 |
| Apr 2020 | 41.8 |
| Mar 2020 | 52.5 |
| Month | SERVICES PMI™ |
|---|---|
| Feb 2020 | 57.3 |
| Jan 2020 | 55.5 |
| Dec 2019 | 54.9 |
| Nov 2019 | 53.9 |
| Oct 2019 | 54.4 |
| Sep 2019 | 53.5 |
In summary, the economy is growing more vigorously in the third quarter than anyone imagined. Additionally, the fourth quarter also has strong growth prospects. This is welcome news when considering Congress failed to pass any new stimulus for the economy. It looks like we have a good tailwind coming into the fourth quarter.
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