US real GDP growth in 2020 remains mostly unchanged

Key Takeaways

Our forecast for U.S. real GDP growth in 2020 remains mostly unchanged, down just 0.1 percentage point relative to our January forecast. U.S. economic data have broadly shown a more positive trend over the past few months, but the coronavirus outbreak in China is a significant downside risk to our forecast. For now, we expect the impact on U.S. economic growth from the coronavirus to be minimal, but we will be monitoring the situation closely and will update our forecast accordingly.

We continue to look for the Fed to keep the fed funds rate unchanged for the foreseeable future.While the coronavirus represents a risk to the outlook, economic growth around 2% and modestly higher core inflation, which is our base case, should keep the Fed from cutting any further. We have modestly revised down our 2020 year-end forecast for the 10-year Treasury yield to 2.10%.

Our 2020 global growth forecast has fallen by 0.1 percentage points and is now just 2.9%, which if realized would be the slowest pace since 2009. This downward revision was largely driven by lower growth expectations in China, where we expect real GDP growth to take about a one percentage point hit in Q1 before bouncing back later in the year.

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