Economists at Deutsche Bank has upgraded their US 2020 growth outlook by 0.2pp to 2.0%, mostly on more resilient consumer spending in the first half of the year. 

“Capex should remain muted, however, as election uncertainty weighs even if trade tensions dissipate. The team now expect core PCE inflation to remain below the Fed’s target through 2022. This is a critical point given the conclusion to the Fed’s policy review in mid-2020, where they expect a dovish renaissance to the Committee’s reaction function. In particular, the team now sees a commitment to avoid the disinflationary fates of other major developed market economies pushing the Fed to cut rates by another 50bps in 2021, even in the presence of near-record low unemployment.”