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Weekly economic review & outlook Solid overall economic growth to close 2020

February 01, 2021

You Need to Know

Week in review

Solid growth for the fourth quarter even as conditions weaken

The economy expanded at an annualized pace of 4.0 percent at the end of 2020, although momentum dissipated over the course of the quarter.

Fed policy to remain highly supportive

Commentary after the January FOMC meeting focused on the extraordinary lengths that the Fed is expected to go to support the economic recovery and push inflation higher.

Week Ahead

Forecasts

ISMs expected to move modestly in opposite directions

We expect the manufacturing ISM survey to show another gain, while ISM services survey is likely to fall – with both moves probably relatively small.

Nonfarm payrolls should rebound with a small gain for January

Aided by the continued recovery in manufacturing and construction, nonfarm payrolls are expected to climb following December’s surprising drop.

Although slightly below expectations, annualized real GDP growth of 4.0 percent for the fourth quarter of 2020 was a solid finish to the year. Last year was a year of extremes, as the economy plunged by 10.1 percent for the six months through June then surged by 8.5 percent during the second half. In the end, total economic activity fell by 3.5 percent on a year-over-year basis — the largest annual decline in real GDP since the 1946 slump when the U.S. was shifting from a war-time to peace-time economy.

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