Before the coronavirus outbreak, our global economic team expected a rebound in global GDP growth. While global growth is still likely to be a bit stronger this year, there will likely be a delay in the recovery. China has already indicated that it will need more time to meet the terms of the Phase I trade deal with the U.S., suggesting that a rebound in U.S. manufacturing activity may take a bit longer. In addition, it suggests that exports are likely to remain sluggish over the next quarter or two.
Another coronavirus risk we see on the horizon is the potential effects on U.S. consumer confidence. Since the coronavirus outbreak, equity markets have remained volatile, which could have an adverse effect on consumer confidence should the trend continue. This, in turn, has the potential to slow consumer spending.
Not all of the risks are negative, however. One factor that could serve to provide some upside to our consumer spending forecast this year is the surge in hiring expected at the end of Q1 and beginning of Q2 for the ground operations related to the Census. Census is expected to hire roughly 500,000 part-time workers to assist with the 2020 Census. The extra part-time hiring could help to lift aggregate disposable income growth.