monthly macro manual...2020/05/13 · note: (w) = wells fargo estim ate, (c) = consensus estim ate,...
TRANSCRIPT
Wells Fargo EconomicsMonthly Macro Manual
Your guide to the data and events that will shape the economic outlook and drive financial markets in the month ahead
May 13, 2020
May 2020
Key Takeaways
2
Developments since our April Monthly Economic Outlook
Thematically, our U.S. economic growth outlook remains roughly unchanged: a huge contraction in realGDP growth in Q2 followed by a rebound in Q3 that will be mechanically boosted by the low base.
While we expect the rebound to be robust in the second half of the year, we still do not believe it will beenough to fully close the output gap that is developing. We have the unemployment rate peaking atroughly 20% in May, for example, but still a bit above 8% by year-end.
We look for the FOMC to keep the fed funds rate at current levels through at least the end of 2021. Ouryear-end 2020 forecast for the 10-year Treasury yield remained unchanged at 1.25%.
Our 2020 global growth forecast has declined further and is now -3.8%. This would easily be the biggestcontraction in recent memory, as the annual decline during the Great Recession was just 0.1%.
We have downgraded our forecasts across nearly all international economies, with sharper contractions inthe United Kingdom, the Eurozone, Canada and Mexico. For now, we have left our forecast for 2020economic growth in China unchanged, as the recovery there seems to be on an increasingly solid track.
Source: U.S. Department of Commerce, International Monetary Fund and Wells Fargo Securities
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
1980 1985 1990 1995 2000 2005 2010 2015 2020
Real Global GDP GrowthYear-over-Year Percent Change, PPP Weights
Global GDP: 2019 @ 2.9%
Average 1980-Present: 3.5%
Period Average WFS
Forecast
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
00 02 04 06 08 10 12 14 16 18 20
U.S. Real GDP Bars = CAGR Line = Yr/Yr Percent Change
GDP - CAGR: Q1 @ -4.8%
GDP - Yr/Yr Percent Change: Q1 @ 0.3%
Forecast
May 2020
Monthly Macro Calendar: May 11-June 5
3
Source: Bloomberg LP and Wells Fargo Securities
Monday Tuesday Wednesday Thursday Friday
11 12 13 14 15
Bost ic (A t la nt a Fed) Con su m er Price In dex (YoY) PPI Fina l Dem a nd (YoY) Im port Price Index (YoY) Ret a il Sa les (MoM)
Discu sses th e Respon se to COV ID-1 9 A pr il 0 .3 % Ma r ch 0.7 %; A pr il -0 .2 % (W) Ma r ch -4 .1 %; A pr il -6 .9 % (W) Ma r ch -8 .4 %; A pr il -1 2 .3 % (W)
Ev a ns (Ch ica go Fed) Ka sh ka ri*(Min n ea polis Fed) Powell* (Fed Ch a irm a n) Init ia l Jobless Cla im s Indu st ria l Produ ct ion (MoM)
Spea ks on V ir u s a n d Econ om y Discu sses th e Econ om y Du r in g Cor on a v ir u s Discu sses Cu r r en t Econ om ic Issu es Ma y 02 3 ,1 6 9 K; Ma y 09 2 ,5 00K (C) Ma r ch -5 .4 %; A pr il -1 0.7 % (W)
Ha rker* (Ph ila delph ia Fed) U.K. Q1 GDP (QoQ) Ka sh ka ri*(Minnea polis Fed)
Discu sses th e Im pa ct of COV ID-1 9 Q4 0.0%; Q1 -2 .5 % (W) Spea ks to th e Econ om ic Clu b of Min n ea polis
18 19 20 21 22
Ja pa n Q1 GDP (QoQ, SA ) Hou sin g St a rt s (SA A R) U.K. Con su m er Price Index (YoY) Exist ing Hom e Sa les (SA A R)
Q4 -1 .8 %; Q1 -1 .1 % (C) Ma r ch 1 ,1 2 1 6 K; A pr il 9 7 0K (C) Ma r ch 1 .5 % Ma r ch 5 .2 7 M; A pr il 4 .3 9 M (C)
Rosengren (Bost on Fed) Ca na da Con su m er Price Index (YoY) Willia m s* (New York Fed)
Discu sses COV ID-1 9 a n d New En g la n d Econ om y Ma r ch 0.9 % Ta kes Pa r t in Webin a r
FOMC Meet ing Minu t es Ja pa n Con su m er Price Index (YoY)
Ma r ch 0.4 %
25 26 27 28 29
Con su m er Con fiden ce In dex U.S. Federa l Reserv e Relea ses Beige Book Du ra ble Goods Orders (MoM) Person a l Incom e & Spending (MoM)
A pr il 8 6 .9 ; Ma y 8 5 .0 (C) Ma r ch -1 4 .7 % Ma r ch -2 .0% (In c); -7 .5 % (Spen d)
New Hom e Sa les (SA A R)
Ma r ch 6 2 7 K; A pr il 5 00K (C)
1 2 3 4 5
ISM Ma nu fa ct u ring Index Reserv e Ba n k of A u st ra lia Ra t e Decision ISM Non -Ma nu fa ct u ring Index T ra de Ba la nce Non fa rm Pa y rolls
A pr il 4 1 .5 Pr ev iou s 0.2 5 % A pr il 4 1 .8 Ma r ch -$4 4 .4 B A pr il -2 0.5 M
Ba nk of Ca na da Ra t e Decision Eu ropea n Cent ra l Ba nk Ra t e Decision Reserv e Ba nk of India Ra t e Decision
Pr ev iou s 0.2 5 %; Ju n e 0.2 5 % (W) Pr ev iou s -0.5 0%; Ju n e -0.5 0% (Deposit Ra te) Pr ev iou s 3 .00% (Ca sh Reser v e Ra t io)
Note: (W) = Wells Fa r g o Est im a te, (C) = Con sen su s Est im a te, * = v ot in g FOMC m em ber in 2 02 0, Red = Ma r ket Mov in g Relea ses
May 2020
Upside scenario: The COVID-19 outbreak subsides and economicactivity begins to rapidly ramp up. Hiring comes back amid the pickup in activity, monetary and fiscal policy responses create thebackdrop for a robust second half of the year and the global economyexperiences a sharp but brief recession.
Downside scenario: As countries begin to reopen, COVID-19 casegrowth jumps, leading to more shutdowns and crimping economicgrowth domestically and abroad. Monetary and fiscal policy responsesare not as effective/forthcoming the second time around, and thesharp recession we currently project drags on over several quarters,leading to more structural damage and a much less robust recovery.
Key Themes and Upside/Downside Scenarios
U.S. Growth Outlook
4
Real GDP growth forecast for Q2-2020: -24.7% (seasonally adjusted annualized rate)
Change since last forecast: -2.4 percentage points
Since our last update, Q1 real GDP was reported to have contracted at a 4.8% annualized rate.
We still anticipate the bulk of the drop in economic activity will occur in the current quarter as incoming datasuggest an unprecedented rate of contraction. We expect a historically large drop in personal consumptionexpenditures, as consumer demand, particularly for services, is absent amid stay-at-home orders. Businessfixed investment and residential construction spending will likely also contract sharply.
Real GDP growth forecast for full-year 2020: -4.6% (year-over-year percent change)
Change since last forecast: -1.6 percentage points
We believe the economy will bottom in April/May. As many parts of the country start to re-open in comingmonths, activity should start to gradually pick up. But, ultimately, the magnitude of the rebound remainsdependent on the virus’ spread, and our forecast is contingent on the virus not reemerging in a way that leadsto another round of widespread lockdowns. Even with a gradual rebound, the economy is unlikely to recoupall of the lost output by year-end 2020 or 2021. By our estimates, real GDP will still be about 7% lower inQ4-2021 than it would have been had the COVID-19 shock never occurred.
Source: U.S. Department of Commerce and Wells Fargo Securities
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
00 02 04 06 08 10 12 14 16 18 20
Real Personal Consumption ExpendituresBars = CAGR Line = Yr/Yr Percent Change
PCE - CAGR: Q1 @ -7.6%
PCE - Yr/Yr Percent Change: Q1 @ 0.4%
Forecast
May 2020 5
Federal Reserve Watch
Inflation Forecast
We have revised our inflation forecast lower. We look forthe rate of CPI inflation to dip to 0.2% by year-end, due,at least in part, to the sharp drop in energy prices that hasoccurred in recent months. The weakness extends beyondenergy, however, and we look for the core rate of CPIinflation to recede to 0.9% due to generalized weakness inpricing power.
Labor Market Forecast
A record 20.5 million people lost their jobs in April, andinitial claims for unemployment benefits suggest thatemployment will weaken even further in May. See Topicof the Month on slide 10 for more detail.
Source: U.S. Department of Labor, Federal Reserve Board andWells Fargo Securities
Fed Funds Outlook
Fed Funds Forecast for 2020 & 2021: No change
We expect the FOMC to keep the fed funds target rangeunchanged at 0% to 0.25% for the foreseeable future.
With the effective fed funds rate at just 0.05%, IOER mayeventually need to go up a bit from its current level of0.10%, perhaps all the way back to 0.25%, where it wasfrom 2008-2015 when the Fed was last at the zero bound.
The Fed has also restarted quantitative easing and dustedoff some of its crisis-era playbook—increasing swap lineswith other central banks, reopening facilities for buyingcommercial paper, lending to primary dealers, etc. Theseprograms will likely be in effect until at least the end of2020, in our view. See a full list of policy support here.
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
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0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
00 02 04 06 08 10 12 14 16 18 20 22
Federal Funds Target RateUpper Bound
Federal Funds: Q1 @ 0.25%
Forecast
-2%
0%
2%
4%
6%
-2%
0%
2%
4%
6%
00 02 04 06 08 10 12 14 16 18 20 22
Consumer Price IndexYear-over-Year Percent Change
CPI: Q1 @ 2.1%
Core CPI: Q1 @ 2.2%
Forecast
May 2020 6
U.S. Interest Rate Outlook
Source: Federal Reserve Board and Wells Fargo Securities
Second half recovery should lead to moderately higher yields
If COVID-19 does not see a major resurgence in H2-2020, the April/May period should mark the low point ineconomic activity for this recession. This underpins our expectation that Treasury yields will start to risemodestly as the second quarter progresses. We look for the 10-year Treasury yield to finish 2020 at 1.25%.
Fed funds rate going nowhere fast
With the Fed unlikely to hike the fed funds rate for an extended period of time, we think the front end of theTreasury curve will remain anchored near current levels.
Fed buying still aggressive, but the pace is slowing
In March, the Federal Reserve bought roughly $800 billion in Treasury securities. In April, the Fed slowed itspurchases to $630 billion in Treasury securities.
We expect the pace of buying to keep slowing, with Treasury purchases complete by summer’s end. Aspurchases slow and Treasury issuance keeps ramping up, this dynamic should push yields up, but onlysomewhat: if yields rise too much too fast, we would expect the Fed to resume purchases.
What Are We Watching in the Month Ahead?
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
Quarter End Interest Rates
Federal Funds Target Rate 1.75 2.00 2.25 2.50 2.50 2.50 2.00 1.75 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.25
3 Month LIBOR 2.31 2.34 2.40 2.81 2.60 2.32 2.09 1.91 1.45 0.50 0.35 0.35 0.45 0.35 0.35 0.40
Prime Rate 4.75 5.00 5.25 5.50 5.50 5.50 5.00 4.75 3.25 3.25 3.25 3.25 3.25 3.25 3.25 3.25
Conventional Mortgage Rate 4.44 4.57 4.63 4.64 4.28 3.80 3.61 3.72 3.45 2.90 2.90 2.95 3.00 3.05 3.15 3.20
3 Month Bill 1.73 1.93 2.19 2.45 2.40 2.12 1.88 1.55 0.11 0.15 0.15 0.15 0.20 0.15 0.15 0.20
6 Month Bill 1.93 2.11 2.36 2.56 2.44 2.09 1.83 1.60 0.15 0.15 0.15 0.15 0.20 0.20 0.25 0.35
1 Year Bill 2.09 2.33 2.59 2.63 2.40 1.92 1.75 1.59 0.17 0.25 0.25 0.25 0.30 0.35 0.45 0.55
2 Year Note 2.27 2.52 2.81 2.48 2.27 1.75 1.63 1.58 0.23 0.35 0.40 0.50 0.65 0.75 0.85 0.95
5 Year Note 2.56 2.73 2.94 2.51 2.23 1.76 1.55 1.69 0.37 0.65 0.75 0.80 0.90 0.95 1.05 1.10
10 Year Note 2.74 2.85 3.05 2.69 2.41 2.00 1.68 1.92 0.70 1.00 1.15 1.25 1.30 1.35 1.45 1.50
30 Year Bond 2.97 2.98 3.19 3.02 2.81 2.52 2.12 2.39 1.35 1.65 1.85 1.90 1.95 2.00 2.05 2.10
Forecast as of: M ay 13, 2020
Actual
Wells Fargo Securities U.S. Interest Rate Forecast
20212018 2019 2020
Forecast
May 2020
Enormous contractions in GDP in Q2 will form arelatively low base off of which to grow in Q3.Mechanically, some bounce back should be in storeas even a low level of activity in some sectors wouldsee strong growth off of a base of essentially zero.
Of course, a near term bounce due to a low base willprove little comfort if the medium- to long-termoutlook does not see the momentum sustained.COVID-19 case growth in Europe has clearly slowed.Preventing a major resurgence on the public healthfront will be key to maintaining economicmomentum over the medium term.
Eurozone, U.K. Recessions to Be Shocking
In the Eurozone and United Kingdom, historicallylow service sector PMI readings of 12.0 and 13.4,respectively, illustrate the extent to which economicactivity has collapsed amid national lockdownsimplemented to stop the spread of COVID-19. Totalemployment in Canada in April is down over 15%from where it was in February.
Even in countries like Japan, which on a relativebasis has seen a much more limited outbreak, theeconomic data have been grim. Retail sales weredown 4.5% in March, with department store salesdown nearly 23% in one month.
Near Term Bounce or Sustained Recovery?
Global Economic Outlook: Advanced Economies
7
Source: Bloomberg LP and Wells Fargo Securities
0
500
1,000
1,500
2,000
2,500
3,000
0
5,000
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20,000
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30,000
Mar-01 Mar-15 Mar-29 Apr-12 Apr-26 May-10
Europe Past Its COVID-19 Peak?Combined New Cases & Deaths for Italy, Germany, Spain & France
Cases 7-Day MA: May-12 @ 5,054 (Left Axis)
Deaths 7-Day MA: May-12 @ 869 (Right Axis)
10
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65
01 03 05 07 09 11 13 15 17 19
European Services Purchasing Manager Indices
E.Z. Services: Apr @ 12.0
U.K. Services: Apr @ 13.4
May 2020 8
Global Central Bank Watch
European Central Bank
We think the ECB is done cutting its policy rates, but we look for a €500 billion increase in the PandemicEmergency Purchase Program (PEPP) at the July 2020 meeting. Even more sovereign bond purchases couldbe beneficial if it helps fiscal policymakers finance rescue packages across the Eurozone.
Bank of Japan
At this point in time, we do not anticipate any further easing from the BoJ, though we see the risks as clearlyskewed towards some type of more accommodative policy.
Bank of England
We think the BoE is done cutting its policy rate, but we look for a ₤100 billion increase in asset purchases atthe June 2020 meeting.
Bank of Canada
We think the BoC is done cutting its policy rate, but we think there is some risk of further increases to its assetpurchase programs.
What Are We Watching in the Month Ahead?
Current WF Next Forecasted
Policy Rate Policy Change
April 2020
Announced $2.3T in loans to support the economy via the Main Street Lending Program, the
Municipal Liquidity Facility, and the expansion of the Primary and Secondary Market Corporate
Credit Facilities
April 2020
Eased the terms and conditions of the TLTRO operations between June 2020 and June 2021
and introduced a new pandemic emergency long-term refinancing operation
March 2020
Cumulative 65 bps of rate cuts during March, plan to increase its holdings of U.K. government
and corporate bonds by 200 billion pounds
April 2020
Raised its purchase target for corporate bonds and commercial paper to ¥20T
April 2020
Announced two new asset purchases programs, a provincial bond purchase program of C$50B
and corporate bond purchase program of C$10B
Forecast as of: May 13, 2020
No change through Q3-2021
Raise its asset purchase target by a further £100B in June
Canada (BoC) 0.25%
Wells Fargo Central Bank Policy Forecasts
Last Major Policy ChangeCentral Bank
No change through Q3-2021
United Kingdom (BoE) 0.10%
Japan (BoJ) -0.10%
United States (FOMC) 0.25%
-0.50%
(Deposit Rate)Eurozone (ECB)
No change through Q4-2021
Increase its pandemic asset purchases a further €500B in July
Source: Bloomberg LP and Wells Fargo Securities
May 2020
The public health situation for EM still remainsunclear, and varies significantly from country tocountry. Are outbreaks worse in the U.S. and Europedue to weather? Older populations? Or is it thatdeveloped economies have seen more robust testing?
Some EM economies like Brazil and Russia areseeing accelerating cases and deaths, a worrisomesign that their battle with COVID-19 may just bebeginning. We believe countries with lowersovereign debt-to-GDP ratios will be better equippedto deal with the economic fallout from a significantCOVID-19 outbreak.
Mexico Growth Severely Challenged
Unfortunately the outlook for emerging marketeconomies is not much better than the developedmarket outlook. Prices for many commodities, suchas oil, remain depressed, and a strong dollar iscreating additional challenges for many EMeconomies. Initial data out of Mexico, for example,were not encouraging: vehicle exports were down90% month-over-month in April. After essentiallyno economic growth in 2019, the Mexican economyappears likely to contract roughly 8% in 2020,followed by another decline of 1% in 2021 as bothcyclical and structural factors weigh on the economy.
EM Public Health Side Still Somewhat Unclear
Global Economic Outlook: Developing Economies
9
Source: International Monetary Fund, Bloomberg LP and Wells Fargo Securities
-10%
-8%
-6%
-4%
-2%
0%
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6%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
04 06 08 10 12 14 16 18 20
Mexico GDP GrowthYear-over-Year Percent Change
Mexico GDP: 2019 @ -0.1%
Forecast
0
2,000
4,000
6,000
8,000
10,000
12,000
0
2,000
4,000
6,000
8,000
10,000
12,000
Mar-01 Mar-15 Mar-29 Apr-12 Apr-26 May-10
COVID-19 Cases in Russia and BrazilDaily New Cases, 7-Day Moving Average
Brazil: May-12 @ 6,103
Russia: May-12 @ 8,830
May 2020
The U.S. labor market shed a record 20.5 million jobs in April and sentthe unemployment rate up 10.3 points to 14.7% (top chart).
No sub-category of employment was spared from the carnage, but painwas concentrated in the leisure & hospitality sector, which has beendisproportionately hit by stay-at-home orders. The sector cut7.7 million jobs in April, accounting for 37% of the total job losses.
Average hourly earnings jumped 4.7%, compared to 0.2%-0.3% onaverage the past few years. This was not a sign of strength, but rather aresult of job losses being concentrated among low-wage workers,causing the average hourly wage to jump in April.
If there was any good news in the April payroll report, it was that18 million of 23 million unemployed individuals reported they were on“temporary layoff” (bottom chart). Whether or not they turn out to bedisplaced on just a temporary basis remains to be seen, and the longerthe crisis goes on, the more likely that what was temporary becomespermanent. But the data give some hope that many displaced workerswill be called back to their jobs as the economy slowly starts to re-openin coming months.
Sadly, this isn’t the end of the bad string of payroll data. There will bemore job losses reported in May, as seven million additionalindividuals have subsequently filed for unemployment insurance.
We forecast nonfarm payrolls to decline by more than 30 millionbefore the recession bottoms out, and the unemployment rate to peakat roughly 20%. The labor market should rebound in the second halfof the year, though we see the unemployment rate still a bit above8% by year-end.
10
Topic of the Month
Labor Market Outlook: Record Decline in April Payrolls, but More to Come
Source: U.S. Department of Labor and Wells Fargo Securities
5%
15%
25%
35%
45%
55%
65%
75%
85%
5%
15%
25%
35%
45%
55%
65%
75%
85%
00 02 04 06 08 10 12 14 16 18 20
Reason for Unemployment: Temporary LayoffPercent of Total Unemployed
On Temporary Layoff : Apr @ 78%
2%
4%
6%
8%
10%
12%
14%
16%
2%
4%
6%
8%
10%
12%
14%
16%
60 65 70 75 80 85 90 95 00 05 10 15 20
Unemployment RateSeasonally Adjusted
Unemployment Rate: Apr @ 14.7%
May 2020 11
U.S. Economic Forecast
Source: U.S. Department of Commerce, U.S. Department of Labor, IHS Markit, Federal Reserve Board and Wells Fargo Securities
Q4 2010 q120202020
2018 2019 2020 2021
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Qq12020 #### #### ## ## ####
Real Gross Domestic Product (a) 2.6 3.5 2.9 1.1 3.1 2.0 2.1 2.1 -4.8 q12020 -24.7 6.7 4.4 2.0 2.3 2.3 2.5 2.9 #### #### 2.3 ## ## -4.6 #### 1.2
Personal Consumption 1.7 4.0 3.5 1.4 1.1 4.6 3.1 1.8 -7.6 q12020 -30.0 19.4 6.0 2.7 2.5 2.6 2.8 3.0 #### #### 2.6 ## ## -4.9 #### 2.7
Business Fixed Investment 8.8 7.9 2.1 4.8 4.4 -1.0 -2.3 -2.4 -8.6 q12020 -21.0 -9.3 3.1 3.0 5.2 4.9 4.9 6.4 #### #### 2.1 ## ## -8.1 #### 0.4
Equipment 6.6 3.4 2.9 7.4 -0.1 0.8 -3.8 -4.3 -15.2 q12020 -31.3 -10.8 15.0 4.6 4.6 4.0 4.0 6.8 #### #### 1.3 ## ## -12.1 #### 1.5
Intellectual Property Products 9.7 11.9 4.1 11.7 10.8 3.6 4.7 2.8 0.4 q12020 -2.4 -2.8 -4.4 3.7 7.4 6.9 6.7 7.4 #### #### 7.5 ## ## 0.3 #### 2.2
Structures 12.1 11.0 -2.1 -9.0 4.0 -11.1 -9.9 -7.2 -9.7 q12020 -32.0 -19.0 -7.5 -3.0 1.5 2.5 3.0 4.1 #### #### -4.3 ## ## -14.9 #### -6.5
Residential Investment -5.3 -3.7 -4.0 -4.7 -1.0 -3.0 4.6 6.5 21.0 q12020 -36.0 -12.0 2.0 3.0 5.0 6.0 6.5 -1.5 #### #### -1.5 ## ## -3.3 #### -1.4
Government Purchases 1.9 2.6 2.1 -0.4 2.9 4.8 1.7 2.5 0.7 q12020 1.4 -0.1 -2.1 -3.3 -1.0 -0.2 0.0 1.7 #### #### 2.3 ## ## 1.3 #### -1.4q12020 #### #### ## ## ####
q12020 #### #### ## ## ####
Net Exports -884.2 -850.5 -962.4 -983.0 -944.0 -980.7 -990.1 -900.7 -817.4 q12020 -701.3 -939.3 -1034.3 -1037.2 -1040.9 -1052.0 -1057.2 -920.0 #### #### -953.9 ## ## -873.1 #### -1046.8
Pct. Point Contribution to GDP 0.0 0.7 -2.1 -0.4 0.7 -0.7 -0.1 1.5 1.3 q12020 2.5 -5.3 -2.1 -0.1 -0.1 -0.2 -0.1 -0.4 #### #### -0.2 ## ## 0.4 #### -1.0
Inventory Change 40.5 -28.0 87.2 93.0 116.0 69.4 69.4 13.1 -16.3 q12020 -100.0 -40.0 60.0 75.0 75.0 70.0 60.0 48.1 #### #### 67.0 ## ## -24.1 #### 70.0
Pct. Point Contribution to GDP 0.1 -1.2 2.1 0.1 0.5 -0.9 0.0 -1.0 -0.5 q12020 -1.8 1.4 2.2 0.3 0.0 -0.1 -0.2 0.1 #### #### 0.1 ## ## -0.5 #### 0.5q12020 #### #### ## ## ####
q12020 #### #### ## ## ####
Nominal GDP (a) 5.0 7.1 4.8 2.9 3.9 4.7 3.8 3.5 -3.5 q12020 -26.6 7.7 6.1 4.0 4.2 3.9 4.1 5.4 #### #### 4.1 ## ## -3.9 #### 2.6
Real Final Sales 2.4 4.8 0.8 1.0 2.6 3.0 2.1 3.1 -4.3 q12020 -22.8 5.2 2.1 1.7 2.3 2.4 2.8 2.8 #### #### 2.2 ## ## -4.0 #### 0.7
Retail Sales (b) 4.4 5.3 5.0 3.0 2.7 3.5 4.0 4.0 1.2 q12020 -19.6 -21.5 -18.2 -14.1 7.6 10.9 7.3 4.4 #### #### 3.6 ## ## -14.6 #### 2.0q12020 #### #### ## ## ####
q12020 #### #### ## ## ####
Inflation Indicators (b) q12020 #### #### ## ## ####
PCE Deflator 1.9 2.3 2.2 1.9 1.4 1.4 1.4 1.4 1.6 q12020 0.4 0.3 0.4 0.5 1.6 1.8 1.7 2.1 #### #### 1.4 ## ## 0.7 #### 1.4
"Core" PCE Deflator 1.8 2.0 2.0 1.9 1.6 1.6 1.7 1.6 1.8 q12020 1.3 1.0 1.1 1.0 1.4 1.5 1.6 2.0 #### #### 1.6 ## ## 1.3 #### 1.4
Consumer Price Index 2.2 2.7 2.7 2.2 1.6 1.8 1.8 2.0 2.1 q12020 0.3 0.2 0.2 0.5 1.8 1.9 1.7 2.4 #### #### 1.8 ## ## 0.7 #### 1.5
"Core" Consumer Price Index 1.9 2.2 2.3 2.2 2.1 2.1 2.3 2.3 2.2 q12020 1.4 1.0 0.9 0.8 1.6 1.6 1.7 2.1 #### #### 2.2 ## ## 1.4 #### 1.4
Producer Price Index (Final Demand) 2.8 3.0 3.1 2.8 1.9 2.0 1.6 1.1 1.3 q12020 0.4 0.8 1.2 1.8 2.6 2.7 2.7 2.9 #### #### 1.7 ## ## 0.9 #### 2.4
Employment Cost Index 2.7 2.8 2.8 2.9 2.8 2.7 2.8 2.7 2.8 q12020 2.4 2.0 1.8 1.5 1.8 2.0 2.1 2.8 #### #### 2.7 ## ## 2.2 #### 1.8q12020 #### #### ## ## ####
q12020 #### #### ## ## ####
Real Disposable Income (b) 3.9 3.9 4.1 3.9 3.3 3.0 2.7 2.4 1.4 q12020 -9.7 -7.6 -2.6 -1.8 10.9 8.0 1.1 4.0 #### #### 2.9 ## ## -4.6 #### 4.3
Nominal Personal Income (b) 5.6 5.8 5.9 4.9 4.6 4.7 4.2 4.1 3.1 q12020 -10.2 -9.1 -5.1 -4.6 10.1 9.0 3.6 5.6 #### #### 4.4 ## ## -5.4 #### 4.2
Industrial Production (a) 2.3 4.6 5.2 3.9 -1.9 -2.3 1.1 0.3 -7.5 q12020 -46.6 -12.2 -5.1 3.0 6.3 5.7 3.6 3.9 #### #### 0.9 ## ## -14.2 #### -4.0
Capacity Utilization 77.9 78.5 79.1 79.4 78.6 77.8 77.6 77.2 75.5 q12020 61.7 70.4 71.1 71.4 72.5 73.5 74.2 78.7 #### #### 77.8 ## ## 69.7 #### 72.9
Corporate Profits Before Taxes (b) 2.9 2.4 4.2 4.2 -2.2 1.3 -1.2 2.2 -2.0 q12020 -15.0 -12.0 -2.0 6.0 15.0 14.0 5.0 3.4 #### #### 0.0 ## ## -7.8 #### 9.7
Corporate Profits After Taxes 10.3 8.3 11.3 10.1 -2.9 1.3 -0.3 2.2 -1.3 q12020 -14.3 -11.9 -1.5 7.3 16.3 15.3 6.2 10.0 #### #### 0.1 ## ## -7.3 #### 11.0q12020 #### #### ## ## ####
q12020 #### #### ## ## ####
Federal Budget Balance (c) -375 -7 -172 -319 -372 -56 -237 -357 -387 q12020 -1937 -720 -541 -658 -328 -472 -383 -779 #### #### -984 ## ## -3400 #### -2000
Trade Weighted Dollar Index (d) 103.1 107.3 107.6 110.1 109.8 109.7 111.0 109.9 112.7 q12020 115.5 115.3 113.3 111.7 110.3 109.8 109.8 106.4 #### #### 110.1 ## ## 114.2 #### 110.4q12020 #### #### ## ## ####
q12020 #### #### ## ## ####
Nonfarm Payroll Change (e) 234 211 153 172 139 159 203 210 -142 q12020 -9500 4250 800 500 300 230 130 193 #### #### 178 ## ## -1148 #### 290
Unemployment Rate 4.1 3.9 3.8 3.8 3.9 3.6 3.6 3.5 3.8 q12020 17.6 12.1 8.1 7.1 6.6 6.4 6.3 3.9 #### #### 3.7 ## ## 10.4 #### 6.6
Housing Starts (f) 1.32 1.26 1.23 1.19 1.21 1.26 1.28 1.44 1.47 q12020 1.22 0.90 1.10 1.21 1.21 1.22 1.23 1.25 #### #### 1.29 ## ## 1.17 #### 1.22
Light Vehicle Sales (g) 17.1 17.3 17.0 17.4 16.8 17.0 17.0 16.7 15.0 q12020 9.0 11.0 13.3 15.7 16.2 16.4 16.6 17.2 #### #### 16.9 ## ## 12.1 #### 16.2
Crude Oil - Brent - Front Contract (h) 66.9 74.6 75.8 68.6 63.8 67.6 61.5 61.7 51.0 q12020 18.0 30.0 37.0 37.0 37.0 37.0 37.0 71.5 #### #### 63.6 ## ## 34.0 #### 37.0q12020 #### #### ## ## ####
q12020 #### #### ## ## ####
Quarter-End Interest Rates (i) q12020 #### #### ## ## ####
Federal Funds Target Rate 1.75 2.00 2.25 2.50 2.50 2.50 2.00 1.75 0.25 q12020 0.25 0.25 0.25 0.25 0.25 0.25 0.25 1.96 #### #### 2.25 ## ## 0.25 #### 0.25
3 Month LIBOR 2.31 2.34 2.40 2.81 2.60 2.32 2.09 1.91 1.45 q12020 0.50 0.35 0.35 0.45 0.35 0.35 0.40 2.31 #### #### 2.33 ## ## 0.66 #### 0.39
Prime Rate 4.75 5.00 5.25 5.50 5.50 5.50 5.00 4.75 3.25 q12020 3.25 3.25 3.25 3.25 3.25 3.25 3.25 4.96 #### #### 5.25 ## ## 3.25 #### 3.25
Conventional Mortgage Rate 4.44 4.57 4.63 4.64 4.28 3.80 3.61 3.72 3.45 q12020 2.90 2.90 2.95 3.00 3.05 3.15 3.20 4.54 #### #### 3.94 ## ## 3.05 #### 3.10
3 Month Bill 1.73 1.93 2.19 2.45 2.40 2.12 1.88 1.55 0.11 q12020 0.15 0.15 0.15 0.20 0.15 0.15 0.20 1.97 #### #### 2.11 ## ## 0.14 #### 0.18
6 Month Bill 1.93 2.11 2.36 2.56 2.44 2.09 1.83 1.60 0.15 q12020 0.15 0.15 0.15 0.20 0.20 0.25 0.35 2.14 #### #### 2.11 ## ## 0.15 #### 0.25
1 Year Bill 2.09 2.33 2.59 2.63 2.40 1.92 1.75 1.59 0.17 q12020 0.25 0.25 0.25 0.30 0.35 0.45 0.55 2.33 #### #### 2.05 ## ## 0.23 #### 0.41
2 Year Note 2.27 2.52 2.81 2.48 2.27 1.75 1.63 1.58 0.23 q12020 0.35 0.40 0.50 0.65 0.75 0.85 0.95 2.53 #### #### 1.97 ## ## 0.37 #### 0.80
5 Year Note 2.56 2.73 2.94 2.51 2.23 1.76 1.55 1.69 0.37 q12020 0.65 0.75 0.80 0.90 0.95 1.05 1.10 2.75 #### #### 1.95 ## ## 0.64 #### 1.00
10 Year Note 2.74 2.85 3.05 2.69 2.41 2.00 1.68 1.92 0.70 q12020 1.00 1.15 1.25 1.30 1.35 1.45 1.50 2.91 #### #### 2.14 ## ## 1.03 #### 1.40
30 Year Bond 2.97 2.98 3.19 3.02 2.81 2.52 2.12 2.39 1.35 q12020 1.65 1.85 1.90 1.95 2.00 2.05 2.10 3.11 #### #### 2.58 ## ## 1.69 #### 2.03q12020 #### #### ## ## ####
Forecast as of: May 13, 2020
Notes: (a) Compound Annual Growth Rate Quarter-over-Quarter (f) Millions of Units - Annual Data - Not Seasonally Adjusted
(b) Year-over-Year Percentage Change (g) Quarterly Data - Average Monthly SAAR; Annual Data - Actual Total Vehicles Sold
(c) Quarterly Sum - Billions USD; Annual Data Represents Fiscal Yr. (h) Quarterly Average of Daily Close
(d) Federal Reserve Advanced Foreign Economies Index, 2006=100 - Quarter End (i) Annual Numbers Represent Averages
(e) Average Monthly Change
Forecast ForecastActual
Wells Fargo Securities U.S. Economic Forecast
2018 2019 2020 2021
Actual
May 2020 12
U.S. Economic Forecast: Change Since April 08, 2020
Source: U.S. Department of Commerce, U.S. Department of Labor, IHS Markit, Federal Reserve Board and Wells Fargo Securities
q120202020
2018 2019 2020 2021 2018 2019 2020 2021
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Qq12020 q12020 q12020 q12020 q12020
Real Gross Domestic Product (a) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -3.59 q12020 -2.44 q12020 -0.49 q12020 -0.43 -0.79 q12020 -0.20 q12020 0.07 q12020 0.18 0.00 0.00 -1.54 -0.56
Personal Consumption 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -6.03 q12020 -2.10 q12020 -0.18 q12020 -0.02 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 -2.06 -0.22
Business Fixed Investment 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -1.84 q12020 1.46 q12020 0.05 q12020 0.13 0.04 q12020 0.02 q12020 0.01 q12020 0.01 0.00 0.00 -0.13 0.17
Equipment 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 1.52 q12020 1.70 q12020 0.01 q12020 0.08 0.01 q12020 0.01 q12020 0.00 q12020 0.00 0.00 0.00 0.80 0.19
Intellectual Property Products 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -3.95 q12020 4.08 q12020 0.00 q12020 -0.03 0.01 q12020 0.01 q12020 0.00 q12020 0.01 0.00 0.00 -0.17 0.27
Structures 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -2.71 q12020 -6.50 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 -2.06 -0.59
Residential Investment 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 9.03 q12020 -6.00 q12020 2.00 q12020 7.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.97 1.02
Government Purchases 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -1.47 q12020 -0.41 q12020 -1.53 q12020 -3.26 -4.27 q12020 -1.17 q12020 0.33 q12020 0.90 0.00 0.00 -0.85 -2.02q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Net Exports 0.0 q12020 0.0 q12020 0.0 q12020 0.0 0.0 0.0 q12020 0.0 0.0 -17.7 q12020 -6.7 q12020 -5.8 q12020 -6.5 -6.6 q12020 -6.7 q12020 -6.8 q12020 -6.8 0.0 0.0 -9.2 -6.7
Pct. Point Contribution to GDP 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -0.82 q12020 0.26 q12020 -0.07 q12020 -0.05 0.00 q12020 0.00 q12020 -0.01 q12020 0.00 0.00 0.00 -0.05 0.00
Inventory Change 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 63.68 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 15.92 0.00
Pct. Point Contribution to GDP 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 1.39 q12020 -1.33 q12020 0.02 q12020 0.04 0.01 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.08 -0.08q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Nominal GDP 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -3.61 q12020 -3.33 q12020 -0.87 q12020 -0.50 -0.80 q12020 -0.20 q12020 0.07 q12020 0.18 0.00 0.00 -1.81 -0.71
Real Final Sales 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -5.54 q12020 -0.95 q12020 -0.51 q12020 -0.47 -0.80 q12020 -0.20 q12020 0.08 q12020 0.18 0.00 0.00 -1.67 -0.44
Retail Sales (b) -0.31 q12020 -0.39 q12020 -0.45 q12020 -0.50 -0.08 0.10 q12020 0.02 0.13 -1.84 q12020 -11.83 q12020 -11.30 q12020 -11.80 -10.82 q12020 0.00 q12020 0.00 q12020 0.00 -0.41 0.04 -9.24 -3.42q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Inflation Indicators (b) q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
PCE Deflator 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -0.01 q12020 -0.30 q12020 -0.38 q12020 -0.40 -0.39 q12020 -0.10 q12020 -0.01 q12020 0.00 0.00 0.00 -0.27 -0.13
"Core" PCE Deflator 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -0.01 q12020 -0.12 q12020 -0.15 q12020 -0.16 -0.16 q12020 -0.05 q12020 -0.02 q12020 -0.03 0.00 0.00 -0.11 -0.06
Consumer Price Index 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -0.04 q12020 -0.64 q12020 -0.57 q12020 -0.48 -0.43 q12020 -0.02 q12020 -0.19 q12020 -0.32 0.00 0.00 -0.44 -0.24
"Core" Consumer Price Index 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -0.06 q12020 -0.75 q12020 -0.75 q12020 -0.75 -0.68 q12020 0.05 q12020 0.08 q12020 0.12 0.00 0.00 -0.58 -0.11
Producer Price Index (Final Demand) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.03 q12020 0.03 q12020 0.03 q12020 0.03 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.03 0.00
Employment Cost Index 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.15 q12020 -0.15 q12020 -0.37 q12020 -0.37 -0.52 q12020 -0.22 q12020 0.00 q12020 0.00 0.00 0.00 -0.19 -0.18q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Real Disposable Income (b) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -0.69 q12020 -1.48 q12020 -1.41 q12020 -1.46 -0.79 q12020 0.16 q12020 0.03 q12020 -0.01 0.00 0.00 -1.26 -0.18
Nominal Personal Income (b) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -0.64 q12020 -1.55 q12020 -1.57 q12020 -1.64 -1.04 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 -1.35 -0.30
Industrial Production (a) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.12 -5.73 q12020 -37.13 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.01 -10.06 -3.52
Capacity Utilization 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.02 -1.41 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.01 -0.35 0.00
Corporate Profits Before Taxes (b) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -3.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 -1.00 0.00 0.00 -0.73 -0.24
Corporate Profits After Taxes 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -3.05 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 -1.00 0.00 0.00 -0.74 -0.24q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Federal Budget Balance (c) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 151.43 q12020-892.32 q12020 -259.11 q12020 -21.90 -19.49 q12020 -34.35 q12020 -24.26 q12020 -0.16 0.00 0.00 -1000.00 -100.00
Trade Weighted Dollar Index (d) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.80 q12020 0.05 q12020 -2.05 -2.60 q12020 -2.75 q12020 -2.15 q12020 -2.15 0.00 0.00 -0.30 -2.41q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Nonfarm Payroll Change (e) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -71.33 q12020-2500.00 q12020 350.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 -555.33 0.00
Unemployment Rate 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 2.50 q12020 0.40 q12020 -0.20 -0.20 q12020 -0.30 q12020 -0.20 q12020 -0.20 0.00 0.00 0.67 -0.23
Housing Starts (f) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 -0.01 q12020 0.02 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
Light Vehicle Sales (g) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 -0.07 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 -0.02 0.00
Crude Oil - Brent - Front Contract (h) 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Quarter-End Interest Rates (i) q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Federal Funds Target Rate 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
3 Month LIBOR 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
Prime Rate 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
Conventional Mortgage Rate 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
3 Month Bill 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
2 Year Note 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
5 Year Note 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
10 Year Note 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00
30 Year Bond 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 q12020 0.00 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 q12020 0.00 q12020 0.00 q12020 0.00 0.00 0.00 0.00 0.00q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020 q12020
Forecast as of: May 13, 2020
Notes: (a) Compound Annual Growth Rate Quarter-over-Quarter (f) Millions of Units - Annual Data - Not Seasonally Adjusted
(b) Year-over-Year Percentage Change (g) Quarterly Data - Average Monthly SAAR; Annual Data - Actual Total Vehicles Sold
(c) Quarterly Sum - Billions USD; Annual Data Represents Fiscal Yr. (h) Quarterly Average of Daily Close
(d) Federal Reserve Advanced Foreign Economies Index, 2006=100 - Quarter End (i) Annual Numbers Represent Averages
(e) Average Monthly Change
Changes to the Wells Fargo Securities U.S. Economic Forecast
ForecastActualForecastActual
May 2020 13
International Forecast
Source: International Monetary Fund and Wells Fargo Securities
(Year-over-Year Percent Change)
GDP
2018 2019 2020 2021 2018 2019 2020 2021
Global (PPP Weights) 3.6% 3.0% -3.8% 3.3% 3.6% 3.4% 2.8% 3.0%
Advanced Economies1 2.2% 1.9% -5.7% 1.9% 2.0% 1.6% 0.5% 1.5%
United States 2.9% 2.3% -4.6% 1.2% 2.4% 1.8% 0.7% 1.5%
Eurozone 1.9% 1.2% -8.0% 2.2% 1.8% 1.2% 0.3% 1.4%
United Kingdom 1.3% 1.4% -8.1% 4.3% 2.5% 1.8% 0.7% 1.3%
Japan 0.3% 0.7% -5.6% 0.1% 1.0% 0.5% -0.1% 0.7%
Canada 2.0% 1.6% -6.3% 3.5% 2.3% 1.9% 0.8% 1.7%
Developing Economies1 4.5% 3.8% -2.4% 4.2% 4.8% 4.8% 4.4% 4.1%
China 6.7% 6.1% -1.2% 7.5% 2.1% 2.9% 2.3% 1.5%
India 6.9% 5.3% -1.7% 3.6% 3.9% 3.7% 4.2% 3.8%
Mexico 2.1% -0.1% -8.3% -1.3% 4.9% 3.6% 2.7% 3.3%
Forecast as of: May 13, 20201Aggregated Using PPP Weights
CPI
Wells Fargo Securities International Economic Forecast
May 2020 14
International Forecast: Change Since April 08, 2020
Source: International Monetary Fund and Wells Fargo Securities
(Year-over-Year Percent Change)
GDP
2018 2019 2020 2021 2018 2019 2020 2021
Global (PPP Weights) -0.01% 0.00% -1.12% 0.29% 0.00% 0.00% 0.22% 0.04%
Advanced Economies1 0.02% 0.00% -2.36% 0.63% 0.00% 0.00% 0.01% 0.00%
United States 0.00% 0.00% -1.54% -0.56% 0.00% 0.00% -0.50% -0.15%
Eurozone 0.00% 0.01% -3.54% 1.74% 0.00% 0.00% 0.41% 0.16%
United Kingdom 0.00% 0.00% -4.64% 3.37% 0.00% 0.00% 0.20% 0.11%
Japan 0.00% 0.00% -1.34% -0.66% 0.00% 0.00% 0.41% -0.07%
Canada 0.00% 0.00% -2.15% 3.92% 0.00% 0.00% 0.59% 0.25%
Developing Economies1 -0.02% 0.00% -0.23% 0.05% -0.01% 0.00% 0.36% 0.07%
China 0.00% 0.00% -0.06% -0.01% 0.00% 0.00% 0.49% 0.00%
India 0.00% 0.00% -0.51% -0.02% 0.00% 0.00% -0.01% 0.00%
Mexico 0.01% 0.00% -3.21% -1.09% 0.00% 0.00% -0.26% 0.18%
Forecast as of: May 13, 2020
1Aggregated Using PPP Weights
Changes to the Wells Fargo International Economic Forecast
CPI
May 2020 15
International Forecast
Source: International Monetary Fund and Wells Fargo Securities
(End of Quarter Rates)
Q2 Q3 Q4 Q1 Q2 Q3
United States 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Eurozone1 -0.50% -0.50% -0.50% -0.50% -0.50% -0.50%
United Kingdom 0.10% 0.10% 0.10% 0.10% 0.10% 0.10%
Japan -0.10% -0.10% -0.10% -0.10% -0.10% -0.10%
Canada 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Q2 Q3 Q4 Q1 Q2 Q3
United States 0.35% 0.40% 0.50% 0.65% 0.75% 0.85%
Eurozone2 -0.70% -0.65% -0.60% -0.50% -0.40% -0.25%
United Kingdom 0.10% 0.20% 0.30% 0.40% 0.50% 0.60%
Japan -0.15% -0.15% -0.10% 0.00% 0.05% 0.05%
Canada 0.50% 0.55% 0.60% 0.75% 0.90% 1.00%
Q2 Q3 Q4 Q1 Q2 Q3
United States 1.00% 1.15% 1.25% 1.30% 1.35% 1.45%
Eurozone2 -0.40% -0.30% -0.20% -0.10% 0.00% 0.10%
United Kingdom 0.40% 0.55% 0.70% 0.75% 0.80% 0.85%
Japan 0.00% 0.05% 0.10% 0.15% 0.15% 0.20%
Canada 0.80% 0.90% 1.05% 1.15% 1.25% 1.35%
Forecast as of: May 13, 20201 ECB Deposit Rate 2 German Government Bond Yield
20212020
2020
2020
Wells Fargo Securities International Interest Rate Forecast
Central Bank Key Policy Rate
2-Year Note
10-Year Note
2021
2021
May 2020 16
International Forecast: Change Since April 08, 2020
Source: International Monetary Fund and Wells Fargo Securities
(End of Quarter Rates)
Q2 Q3 Q4 Q1 Q2 Q3
United States 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Eurozone1 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
United Kingdom 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Japan 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Canada 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Q2 Q3 Q4 Q1 Q2 Q3
United States 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Eurozone2 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
United Kingdom -0.05% 0.00% 0.00% 0.00% 0.00% 0.00%
Japan 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Canada -0.10% -0.10% -0.10% -0.10% -0.10% -0.10%
Q2 Q3 Q4 Q1 Q2 Q3
United States 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Eurozone2 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
United Kingdom -0.05% 0.00% 0.00% 0.00% 0.00% 0.00%
Japan 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Canada -0.10% -0.10% -0.10% -0.10% -0.10% -0.10%
Forecast as of: May 13, 2020
1 ECB Deposit Rate 2 German Government Bond Yield
10-Year Note
2020 2021
Change in Wells Fargo International Interest Rate Forecast
Central Bank Key Policy Rate
2020 2021
2-Year Note
2020 2021
May 2020
Wells Fargo Securities Economics Group
17
Jay H. Bryson, Acting Chief Economist …[email protected]
Mark Vitner, Senior Economist [email protected]
Sam Bullard, Senior Economist [email protected]
Nick Bennenbroek, International Economist [email protected]
Tim Quinlan, Senior Economist [email protected]
Azhar Iqbal, Econometrician [email protected]
Sarah House, Senior Economist [email protected]
Charlie Dougherty, Economist [email protected]
Michael Pugliese, Economist [email protected]
Brendan McKenna, International Economist [email protected]
Economists
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Shannon Seery, Economic Analyst [email protected]
Matthew Honnold, Economic Analyst [email protected]
Jen Licis, Economic Analyst [email protected]
Hop Mathews, Economic Analyst [email protected]
Administrative Assistants
Economic Analysts
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