US business economists see full recovery by end of 2021

NEW YORK, United States (AP) — The US economy’s growth is likely slowing as 2020 comes to a close but a growing number of economists expect it to claw back to its pre-pandemic strength by the second half of next year as vaccines for the coronavirus become widely distributed.

That’s the view from the latest survey of the National Association for Business Economics (NABE). It found that 73 per cent of surveyed forecasters say the economy will return to its pre-pandemic level by late 2021. That reflects greater optimism than the forecasters had expressed a couple months ago, when just 38 per cent of them said they thought a full recovery could occur before 2022.

Economists have been saying for months that only when vaccines are widely available to control or defeat the virus will the economy be able to sustain any meaningful recovery from the worst economic downturn since the Great Depression of the 1930s.

Hopes that one or more coronavirus vaccines will roll out soon are helping drive expectations higher, said the survey’s chair, Holly Wade.

“NABE panellists have become more optimistic, on balance,” Wade said, “with nearly one third revising their outlook higher based on recent news of effective vaccines.”

Pharmaceutical companies are asking US regulators to allow the use of their vaccine candidates after reporting encouraging data from clinical trials. The hope is that a wide roll-out would mean fewer restrictions on businesses next year and more confidence among shoppers and companies to spend more.

In the meantime the economy is struggling to gain traction. Measures of the consumer confidence critical to spending and growth remain well below their pre-pandemic levels.

On Friday last the Government reported that employers sharply scaled back their hiring in November, adding 245,000 jobs — the fewest since April and the fifthstraight monthly slowdown. The report provided the latest evidence that the job market and economy are faltering in the face of a virus that has been shattering daily records for confirmed infections.

In the near term economic activity is likely to slow further, with health officials warning against all but essential travel and states and cities limiting gatherings, restricting restaurant dining, and reducing the hours and capacity of bars, stores and other businesses.

But if the NABE’S forecasts are right, a full recovery could be reached by late next year. If so, it would mark a remarkably quick rebound for the economy after its breathtaking plummet during the spring.

When the coronavirus was first spreading and governors around the country ordered businesses to shut down, the US economy shrank by a punishing annualised rate of 31.4 per cent from April through June.

During the summer, as stayat-home orders were relaxed, the economy exploded higher off that very weak base and grew at an annualised rate of 33.1 per cent. Now that the easiest gains have been made, the economists surveyed by NABE say the economy likely has been growing at an annualised rate of 4.1 per cent during the last three months of 2020. They expect growth to further slow to an annualised rate of 2.9 per cent during the first three months of 2021.

The main concern going forward, of course, remains the pandemic. Even if a vaccine is approved quickly, it would be scarce at first and most people wouldn’t be able to get one for a while. In the meantime, soaring COVID-19 numbers are forcing governments around the world to reimpose varying degrees of restrictions on businesses.

Slightly more than a quarter of forecasters surveyed by NABE, 27 per cent, said the biggest risk facing the economy is inaction by Washington to offer more financial aid. The only risk cited more often was the pandemic itself, at 57 per cent.