Economic Outlook for US Dips as Coronavirus Cases Surge
A recent Reuters poll indicates that hopes for economic recovery in the US have dipped and the economic outlook has turned gloomier ahead of the upcoming presidential election. The recent spike in fresh coronavirus cases and continued uncertainty about the next round of fiscal stimulus measures are the main drivers behind this.
The resurgence in the number of infections and hospitalizations has been highlighted as a key factor that could halt the rebound in the US economy, as per almost two thirds of economists polled by Reuters. After a 31.4% contraction in GDP during Q2 2020, the US economy is expected to see a 4% growth in Q4 but experience an overall contraction of 4% for 2020.
More than 80% of economists expect unemployment rate to return to pre-pandemic levels only by 2023 at the earliest. The unemployment rate could touch 8.3% for this year and drop to 6.8% and 5.5% by 2021 and 2022 respectively, still above the 3.5% level prior to the pandemic.
However, there is some hope that a clear, decisive victory for Biden could clear the way for the stimulus bill and offer some support to the economy. Almost 75% of economists indicate that Democrats getting a majority in the Senate and Biden coming to power could strengthen US’s economic recovery in the short term. On the other hand, a tightly contested election could impede implementation of the coronavirus relief package.
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