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
What’s the outlook for vaccine supply?
Chief executives of America’s COVID-19 vaccine makers promised in congressional testimony to deliver the doses promised to the U.S. government by summer. The projections of confidence come after months of supply chain challenges and companies falling short of year-end projections for 2020. What changed? In part, drugmakers that normally compete are now actually helping one another. This has helped solve several supply chain issues, but not all of them.
How has the pandemic changed scientific research?
Over the past year, while some scientists turned their attention to COVID-19 and creating vaccines to fight it, most others had to pause their research — and re-imagine how to do it. Social distancing, limited lab capacity — “It’s less fun, I have to say. Like, for me the big part of the science is discussing the science with other people, getting excited about projects,” said Isabella Rauch, an immunologist at Oregon Health & Science University in Portland. Funding is also a big question for many.
What happened to all of the hazard pay essential workers were getting at the beginning of the pandemic?
Almost a year ago, when the pandemic began, essential workers were hailed as heroes. Back then, many companies gave hazard pay, an extra $2 or so per hour, for coming in to work. That quietly went away for most of them last summer. Without federal action, it’s mostly been up to local governments to create programs and mandates. They’ve helped compensate front-line workers, but they haven’t been perfect. “The solutions are small. They’re piecemeal,” said Molly Kinder at the Brookings Institution’s Metropolitan Policy Program. “You’re seeing these innovative pop-ups because we have failed overall to do something systematically.”
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