In the home stretch of an unprecedented year, MDM Analytics’ revised forecast for the third quarter shows a sharp rebound out of the second quarter trough, and a continued growth pattern through the fourth quarter.
The pattern is great news for all distribution sectors, but note that the revised fourth quarter recovery outlook flattens slightly, with a stronger acceleration through the second quarter of 2021. Continued growth is forecast through 2021 and 2022, but moderating to mid-single-digit levels.
MDM’s baseline annual forecast for 2020 for the wholesale distribution industry is for a 5.6% decrease from 2019, with a snapback in 2021 to a baseline estimate of 7.5% growth. Overall, when third-quarter GDP data is released, it’s projected to show a year-over-year decrease of roughly 5%, reflected across wholesale distribution sectors overall, but it will likely take two years to return to peak GDP, based on consensus GDP forecasts.
The 2020 pandemic recession has brought with it a number of records – unemployment, record decrease in wage and salary earnings, but also a record increase in personal income through government payments, including stimulus payments. Consumer behavior shifted dramatically and has played out in the recovery and retail sector performance, with consumer spending shifting from nondurable to durable goods.
There has been a surge in remodeling and home improvement, with building material and garden equipment stores experiencing year-over-year growth, with similar trending for sporting goods and hobby, grocery and liquor stores. These trends have impacted wholesale trade channels serving these retail sectors.
Note: The MDM Analytics Quarterly Markets Forecast shown here is a composite forecast of revenues for all 19 major sectors comprising the $6-trillion U.S. wholesale distribution industry. Contact info@mdm.com for more information regarding individual sector quarterly forecasts through 2022. Data for 3Q20 is forecast in this model until final GDP and other inputs are released in Q420.
