After rebounding by 30% annualised in the third quarter, we expect a more modest 4.5% gain in GDP in the fourth. But recent data suggest the risks to that forecast could lie to the upside, with investment rebounding rapidly and the September retail sales data showing that the recovery in consumption still carries plenty of momentum. Although the recent negotiations have yielded little progress, there is still a chance of additional fiscal stimulus next year although, even under a Democratic clean sweep of the election, it may arrive later that the markets currently appear to be assuming. Furthermore, the renewed upturn in coronavirus cases in the Midwest highlights that there are still downside risks too, with a further significant rise in cases over the winter months potentially weighing on confidence and raising the prospect of restrictions on activity being reimposed.
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