With the third quarter now in the books, US economic activity continues to track our expected trajectory of a quick but incomplete recovery that over time will give way to a more gradual, lengthy path back to “normal.” But many variables can still influence the outcome.

With information about both phases of that path now in hand, we’ve fine-tuned our gross domestic product (GDP) forecasts for this year and beyond (Display). We’re reducing our estimated drop in 2020 US GDP growth from –5.4% to –3.8%. That leaves the economy on course to regain roughly 70 percent of the activity it lost as a result of the pandemic crisis by year end.

A line chart of US gross domestic product since 2017, showing previous and revised forecasts

But the revised forecast also implies a flatter trajectory and a modest growth downgrade for 2021—from a gain of 3.8% to 3.4%, so the overall economic activity level at the end of 2021 doesn’t change meaningfully with this forecast update. In our assessment, it will take until the fourth quarter of 2021 or first quarter of 2022 before US economic activity regains its previous peak.