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Following the second-quarter US GDP report, which showed a contraction of 32.9%, TD Securities analysts said that they still expect the real GDP in the US to expand by 15% on a yearly basis in the third quarter.

Key quotes

“Monthly data showed significant improvement in May and June after a plunge in April, so that is arithmetically positive for the Q3 starting point. Meanwhile, the downtrend in jobless claims appears to have at least stalled. Claims were 1.43m in the latest week, following 1.42mn in the prior week and 1.31mn two weeks earlier.”

“We believe the rise over the last two weeks has been exaggerated by the multiplicative seasonal adjustment process (nsa claims fell to 1.21mn from 1.38mn in the latest week), but the data are likely to add to concerns in markets about the potential for a double dip. Also, continuing claims rose to 17.0mn from 16.2mn in the latest week. (The nsa figure rose to 16.9mn from 16.3mn.).”

“We continue to forecast a +15% q/q AR for real GDP in Q3, although that is down from 18% two weeks ago and it assumes significant slowing on a monthly basis relative to May and June. We have +5% for Q4, but that will depend significantly on COVID developments in coming months.”