By Scott J. Brown, Ph.D., Raymond James
GDP – Real GDP rose at a 4.0% annual rate in the advance estimate for 4Q20, a much more moderate pace of recovery than was seen in the third quarter. Details were mixed, but consumer spending showed a significant loss of momentum and monthly figures reflected weakness in November and December. The surge in the pandemic and efforts to contain it dampened holiday sales and travel. This may, in turn, give way to seasonally adjusted strength in 1Q21, as there should be less of a fallback in the unadjusted data. However, as the Federal Open Market Committee noted in its January 27 policy statement, “the path of the economy will depend significantly on the course of the virus, including progress on vaccinations.”
This Week – There is more than the usual uncertainty in the Employment Report. Annual benchmark revisions to the establishment survey data (payrolls, hours, wages) are expected to be small, but seasonal adjustment could exaggerate the January figures. The January ISM surveys should reflect moderate strength, although the headline figures are likely to remain exaggerated by the pandemic’s impact on supplier delivery times.