In this month's forecast, we lowered our projection for second-quarter GDP growth by 5.4 percentage points to-41.9% and we raised our forecast of third-quarter GDP growth by 7.1 percentage points to 13.2%. This reflects several recent developments that lowered our forecast of the trough of monthly GDP and moved it forward by two months to April. Retail sales declined considerably more than expected in April, as did personal consumption expenditures (PCE) on services, with the unexpected weakness in the latter centered in PCE on healthcare. Meanwhile, many of the high-frequency indicators we are tracking are showing improvement through May and early June. Both throughput at US airports and hotel bookings reached a trough in mid-April and have been firming ever since. Restaurant activity is rising, as indicated by an upward drift in seated diners on the OpenTable network. Employment of hourly workers in the Homebase database is rising. And after reaching a trough in mid-April, a measure of weekly consumption of gasoline from the Energy Information Administration has reversed roughly one-half of its decline. Other developments are not as promising, including dramatic declines in both housing starts and manufacturers' orders in April, both of which will have legacy effects for activity over the next several months.
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