Due to the growing coronavirus outbreak, Dodge Data & Analytics economists have adjusted previous GDP projections downward. They now project a first quarter GDP of -0.1 percent and a steep 6.3 percent decline in GDP for the second quarter, according to a March 20 forecast update from Dodge Data Chief Economist Richard Branch. “Our current thinking is much more negative, with a growing realization that the U.S. economy is now in recession,” said Branch.
Dodge Data’s previous projections of 1.3 percent growth for full year 2020 GDP were “clearly far too optimistic with many areas of the country seeing an unprecedented shutdown in nearly all activity,” Branch said. “As I’m sure you can imagine the impact of the pandemic remains largely unknown. This creates larger forecast error and will result in ongoing adjustments in near real time as we gain additional information.”
Looking further ahead, Dodge Data currently expects a decline of 1.1 percent in the third quarter, “under the assumption that containment of the virus is working, and some aspects of life return to normal, which for Q4 means a return to growth of 1.5 percent,” Branch said.
Full year GDP would decline 0.5 percent, and Dodge projects economic expansion in 2021, with growth of 2.1 percent.
Branch said the effect of coronavirus on starts is unclear. “There are numerous areas in the country where construction has been halted like in Boston and Cambridge, Massachusetts, and others where it has been curtailed such as in San Francisco and Los Angeles where housing construction is deemed an essential service. Some projects have been delayed, while others appear to be proceeding.”