U.S. will release the advance estimate of GDP in Q2 on this Thursday. The analysts at CIBC said that the GDP report wont have a significant impact on markets, as the focus remains in pandemic and geopolitical tensions, and they forecast that the GDP can be drop -35.9%.
CIBC said that the economic shutdown can be cause a -35.9% annualized drop in U.S. GDP in Q2. The main contributor to the drop is the largest component of the economy dan consumption, with a sharp declines in business investment, exports, and residential investment.
Even though the activities accelerated in May and June as the states started to reopen the economy, it clearly has not bounced back as fast as it shutdown, as consumers stay cautious as virus cases surged in June. Some industries will be remain needed a social distancing until a vaccine is available.
Although with the tightening of social distancing restrictions in July along with the resurgence of the virus, the analysts said that the third quarter should see growth. However, the monthly reading’s in July and August will likely reveal that the recovery stalled.
Markets are already expecting a gloomy GDP report and will likely remain more concerned with the surge in virus case figures and geopolitical tensions.
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