Are we almost through the worst of the COVID-19 economic decline?
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The National Association for Business Economics just released its June 2020 outlook survey, looking at how U.S. GDP is going do over the next year or so. All said and done, the U.S. economy will shrink almost 6% this year. That would be the sharpest annual decline since GDP fell 11.6% in 1946, when the nation was demobilizing after World War II.
However, the country is almost done with the worst of it — they predict we’ll be growing again in July, August and September. Next year, they say the economy will grow about 4%.
Constance Hunter, president of the NABE and chief economist at KPMG, says “we should see a bounce back up,” even after a projected 33% drop in GDP, on an annualized basis, for the second quarter of 2020.
She spoke with Marketplace’s Sabri Ben-Achour. The following is an edited transcript of their conversation.
Sabri Ben-Achour: Your panelists are forecasting a 33% drop in second quarter GDP — that’s on an annualized basis. That is staggering. But then when are we going to see things turn around?
Constance Hunter: Most of the panelists believe that the first positive quarterly change in GDP will come in Q3. But here we need to stress that when we have a large decline in quarterly annualized GDP growth, that is not indicative of the trend going forward. We should see a bounce back up. And then really thinking about, when are we going to get back to the pre-COVID levels? And that is something that most economists do not expect until either the second half of 2021 or the first half of 2022.
Ben-Achour: What are the drivers behind that?
Hunter: Really, the health outcomes will drive all of the economic outcomes. And there seems to be an implicit assumption that we will have better treatment protocols. There is a real focus that the risks to the economy are centered on the disease, the protocols around how we interact with it, until we have a vaccine, and then ultimately having a vaccine. Now that we’ve had parts of the economy open, we’re going to see how much social closeness we should be actually having.
COVID-19 Economy FAQs
How many people are flying? Has traveled picked up?
Flying is starting to recover to levels the airline industry hasn’t seen in months. The Transportation Security Administration announced on Oct. 19 that it’s screened more than 1 million passengers on a single day — its highest number since March 17. The TSA also screened more than 6 million passengers last week, its highest weekly volume since the start of the COVID-19 pandemic. While travel is improving, the TSA announcement comes amid warnings that the U.S. is in the third wave of the coronavirus. There are now more than 8 million cases in the country, with more than 219,000 deaths.
How are Americans feeling about their finances?
Nearly half of all Americans would have trouble paying for an unexpected $250 bill and a third of Americans have less income than before the pandemic, according to the latest results of our Marketplace-Edison Poll. Also, 6 in 10 Americans think that race has at least some impact on an individual’s long-term financial situation, but Black respondents are much more likely to think that race has a big impact on a person’s long-term financial situation than white or Hispanic/Latinx respondents.
Find the rest of the poll results here, which cover how Americans have been faring financially about six months into the pandemic, race and equity within the workplace and some of the key issues Trump and Biden supporters are concerned about.
What’s going to happen to retailers, especially with the holiday shopping season approaching?
A report out recently from the accounting consultancy BDO USA said 29 big retailers filed for bankruptcy protection through August. And if bankruptcies continue at that pace, the number could rival the bankruptcies of 2010, after the Great Recession. For retailers, the last three months of this year will be even more critical than usual for their survival as they look for some hope around the holidays.
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