US economic outlook darkens, job recovery risks reversing - Reuters poll

Darks clouds resurfaced over the US economic recovery, in the light of the fresh lockdowns in some of the US states and relentless rise in the coronavirus cases, economists surveyed by Reuters believe. Although the focus remains on the job market recovery.

Key findings

“The economy contracted 33.8% last quarter on an annualized basis but while it was expected to bounce back with 17.8% growth this quarter and expand 6.5% in the following three months, that was weaker than the 18.5% and 8.0% respective growth predictions made a month ago.

Asked for the worst-case scenario for the world’s largest economy, the median response was for a 40.4% contraction in Q2, no growth in the following two quarters, a 9.0% contraction in 2020 and no growth in 2021.

All but one of 60 economists said the outlook for the strength of the US economic recovery had either remained about the same or worsened over the past month.

Nearly 60%, or 32 of 56 economists, said the risk the job recovery underway reverses by the end of this year was high or very high. Twenty-three said the risk was low, while only one said it was very low.

Nearly two-thirds of economists, or 35 of 56 who responded to an additional question, said it would take two or more years for the U.S. economy to reach its pre-COVID-19 levels.

The others said it would take place in one to two years, with no respondent predicting it to take less than a year.”