An increase in corona virus infections will slow growth this fall and winter. Hotels, restaurants, movie theaters, airlines and other severely affected businesses will not be able to fully recover when the epidemic worsens.
If Congress and the Trump administration fail to reach a trigger agreement, more small businesses will certainly fail, state and local layoffs could be accelerated and no trigger tests will come at any time to alleviate the pain for consumers.
“Without further financial assistance until 2021, poorly managed health conditions and electoral uncertainty will lead to a long winter,” Gregory Daco, chief economist at the Oxford Economy, wrote in a statement Monday.
‘Very trembling’ vision
Jefferies too Further pessimistic, it expects only 2% annual growth in the final three months of the year. This is because early withdrawal of financial incentives can be a blow to consumer spending – the biggest driver of the economy and the bright spot of late.
“The outlook for Q4 is very shaky in our view,” Jefferies’ chief financial economist Aneta Markovska wrote in a statement to clients on Thursday. “The economy has already lost a lot of momentum over the summer.”
The risk of double-nosed depression is real
Seema Shah, chief global strategist for leading global investors, wrote in a statement on Thursday that “the path forward will inevitably be an upward struggle.” “With viral cases on the rise and a new financial package yet to be found, economic worries are once again on the rise.”
That is why some economists believe that the recovery will stop.
“When we talk, we’re going into recession again,” Daniel Timardino Booth, chief executive and strategist at Quill Intelligence, told CNN Business this week.
Ziff Hall warns that there is a “strong chance of negative growth” in the fourth quarter as COVID cases increase and new restrictions are imposed.
Even the housing market is the hottest part of the economy, showing signs of cooling off.
Pending home sales fell unexpectedly in September, according to new numbers released Thursday. This marks the first decline since April and is coming despite lower mortgage rates.
Ian Shepherdson, chief economist at Pantheon Macroeconomics, is more nervous in early 2021 than in the end of this year.
“We are concerned that we may see zero growth in the first quarter,” Shepherdson wrote in a statement, “unless a new stimulus is sent out immediately after taking office on January 20.”
When will the trigger come?
That is why the election results will play a key role in the recovery.
If the Democrats win the election, Jefferies expects a $ 3.5 trillion financial stimulus package. This will lead to a strong recovery, Jefferies said, adding that by 2021 GDP will have increased by 5.5%.
If Democrats and Republicans split control of Congress and the White House, the size of the fiscal stimulus package will be small, perhaps even smaller. Jefferies said such a situation would lead to a gradual growth of GDP.
The person in charge will accept an enormous challenge: the U.S. economy has cut nearly 11 million jobs since before the epidemic. JPMorgan will not see full employment until 2022.
“The easy part of economic recovery is over,” said Lauren Goodwin, an economist at New York Life Investments.