WASHINGTON (Reuters) – In a year, the United States may emerge from the economic hole it fell into during the pandemic. At the same time, growth may significantly outstrip the previous trend, and GDP as a whole will recover.
In another scenario, the country could find it difficult to patch the $ 2 trillion hole in GDP, growth stuck at a low level, the health crisis continues, and chronic unemployment persists.
The guessing game that forecasts for the US economy have become has created a huge variation in expectations as economists try to gauge the trajectory of the pandemic and the ability of Congress to compromise on spending.
No significant moves are expected from the Fed meeting on Wednesday, due in part to “a very uncertain outlook,” analysts at Cornerstone Macro wrote this week.
The problem is compounded by the fact that any GDP recovery may not immediately affect the labor market, leaving millions of unemployed Americans without feeling it at all.
Since the 1990s, jobs have been recovering from the recession much more slowly than GDP, as companies waited for a full recovery in demand before hiring employees. With millions of unemployed in vulnerable industries such as tourism and hospitality, and changes in trade due to the pandemic, it may take even longer for the unemployed to find a new job this time around.
The number of jobs currently lags about 11 million behind the February level.
However, the more than 10 million job growth in the past four months has surprised many officials. The unemployment rate of 8.4% as of August is already below the median expectations of Fed officials of 9.3% at the end of the year.
In June, forecasts of representatives of the central bank regarding a fall in GDP showed a wide spread. Some predicted a 10% contraction in GDP in 2020, while others only 4.2%.
Estimates of the unemployment rate at the end of the year as of June ranged from 7% to 14%, showing a range that is several times larger than forecasts during the last recession and immediately after it.
(Howard Schneider; Translated by Anna Rzhevkina. Editor Marina Bobrova)