Biden’s Stimulus To Fuel Faster US Recovery; Jobs Outlook Still Dull: Reuters Poll
The U.S. economy will grow faster than previously thought and reach pre-COVID-19 levels within six months, according to a majority of economists polled by Reuters who however said unemployment would take well over a…
The U.S. economy will grow faster than previously thought and reach pre-COVID-19 levels within six months, according to a majority of economists polled by Reuters who however said unemployment would take well over a year to recover.
Optimism was largely driven by the House of Representatives passing President Joe Biden’s $1.9 trillion relief aid in response to the pandemic, which has killed around 530,000 people in the U.S. and left millions out of work.
After shrinking 3.5% last year, the world’s largest economy was forecast to grow 5.7% this year – the highest since polling began for this period over two years ago, according to the March 8-11 survey of over 100 economists.
In response to an additional question, 85% of economists, or 51 of 60, said the economy would reach pre-COVID-19 levels within a year, including more than 60% expecting it within six months.
“With the vaccination roll-out going well and President Biden indicating all adults will have the opportunity of a vaccine by the end of May we expect a broad re-opening of the economy through the second quarter,” said James Knightley, chief international economist at ING.
“With more stimulus coming and plenty of pent-up demand and strong savings levels to fuel it, we see a strong likelihood that all the lost output will have been regained by the end of Q2.”
Following approval of one the largest stimulus packages in American history the U.S. economy was forecast to grow 4.8% this quarter and 7.2%, 7.1% and 5.0% in the subsequent three quarters respectively, higher than 2.8%, 6.0%, 6.3% and 4.6% predicted last month.
While the U.S. economy created more jobs than expected in February and the jobless rate dropped further, the latest employment report showed it would probably take several years for the labor market to heal from the pandemic’s deep scars.
Over 92% of economists, or 49 of 53, in response to a separate question said it would take over a year for the jobless rate to fall to pre-pandemic levels, including 22 respondents who said two or more years.