Long-time Wall Street economist Joseph LaVorgna thinks the U.S. economy’s recovery from the depths of the COVID-19 pandemic could shock some people later this year.
“The economy looks great,” LaVorgna — now serving as a special advisor to President Trump and chief economist of the NEC after stints at Deutsche Bank and Natixis — told Yahoo Finance’s The First Trade. “We’re looking at GDP this quarter of 20%,” LaVorgna said, adding GDP growth of 20% in the second half of 2020 is “doable.”
Second quarter GDP crashed 32.9%, the worst on record, as the economy was crippled by the COVID-19 pandemic. Suffice it to say, LaVorgna’s GDP forecast is on the aggressive side in light of the second quarter’s challenges. States continue to grapple with fresh COVID-related business closures and businesses are pushing off the return to offices until 2021.
But, LaVorgna points to the July jobs report as a reason for optimism. Payrolls came in better than Wall Street estimates, as did the unemployment rate.
Change in non-farm payrolls: +1.783 million vs. +1.48 million expected and +4.791 million in June
Unemployment rate: 10.2% vs. 10.6% expected and 11.1% in June
Average hourly earnings, month over month: +0.2% vs. -0.5% expected and -1.3% in June
Average hourly earnings, year over year: +4.8% vs. +4.2% expected and +4.9% in June
Revisions: The change in total non-farm payrolls for June was revised down slightly by 9,000 to 4.791 million, while May’s payrolls were revised up by 26,000 to 2.725 million.
“I’ll take this report over anything. It’s a positive number,” said S&P Global Chief economist Beth Ann Bovino.
Even still, stocks fell slightly by afternoon trading Friday after an initial positive response following the release of the jobs report. Strategists told Yahoo Finance there were several red flags in the report, including elevated levels of people quantified as permanent job losers and a slowdown from June jobs growth (4.8 million jobs created).
“I worry the economy has been scarred,” chief economist and head of macro strategy at Manulife Investment Management Frances Donald told Yahoo Finance.
Yahoo Finance’s Emily McCormick contributed to this story.