Changes to the Moody’s Analytics outlook for the U.S. economy were modest in November, with many adjustments resulting from newly released historical data.

View Comparison Table: U.S. Macro Forecast M/M Comparison

A tabular comparison of the current and prior vintages including an assessment of whether meaningful changes can be attributed to new or revised data, changed assumptions, or model changes.

National income

U.S. GDP growth moderated in the third quarter, according to the preliminary report from the Bureau of Economic Analysis. Real GDP expanded 1.9%, down from 2.0% in the second quarter and 3.1% in the first quarter of 2019. Personal consumption expenditures remained strong, while the positive contributions from government spending lessened. The negative effects from inventory investment and trade moderated as well.

The forecast for several GDP components changed this month mostly in response to the addition of a new quarter of history, as well as an adjustment in our interest rate forecasts. On the whole, Moody’s Analytics expects real GDP to grow by 2.3% this year, similar to last month’s forecast. Growth will clock in at 1.7% in 2020 and 2.0% in 2021.

Fiscal policy

New government expenditures data released by BEA caused minor changes in our November forecast. We anticipate government consumption and investment will grow 2.4% this year–a slight downgrade from the October baseline–and 2.8% in 2020, which matches the pace of growth forecast in the October vintage.

Monetary policy

Our federal funds rate forecast changed. We are assuming the Fed will no longer cut rates in December but will ease policy in mid-2020 as growth softens next year. In effect, we are pushing the December 2019 rate cut out to June 2020 in our forecast. This change in assumptions comes following new forward guidance from the Federal Open Market Committee.

Labor market

Our near-term unemployment rate forecast changed little from October. The jobless rate will average 3.7% this year and 3.6% next year. The forecast for total employment held steady. Job additions will continue through the middle of 2020.

Energy

The forecast for WTI oil prices was virtually unchanged compared with last month. Our forecast accounts for weakness in global oil demand, and despite Iranian exports falling substantially, we expect surpluses in the first half of 2020. Such market conditions will put downward pressure on prices in the near term. Moody’s Analytics expects oils prices to average near $58.67/barrel in 2020 and $61.29/barrel in 2021.

Inflation

The forecast path for CPI changed in response to newly released history. CPI growth will be 1.7% in 2019 and 2.0% in 2020.

CCAR variables

The only stochastic CCAR variable that received a qualitative overlay this month was the 10-year Treasury rate. It was altered to account for recent history and to align more closely with our assumptions for monetary policy. The November baseline shows the 10-year Treasury yield averaging around 2.4% in 2020, down from 2.5% in the October baseline.

Changes to Historical Data: Global Macro Model Historical Data Changes

A summary of this month’s major changes to historical dataset(s) used in the global model.