A man walks by a pizza restaurant while wearing a face mask in Jersey City, New Jersey
The road ahead for the U.S. economy looks rockier now than it did in June, according to a survey of economists released Monday.
While growth is expected to continue, a panel of 52 economists has lowered its forecast for the rate of growth for the last three months of this year and for 2021, the National Association for Business Economists said.
Economists cut their forecast for October-December growth to a 4.9% annual rate from their prior estimate in June of a 6.8% rate.
For all of this year, the economy will contract by a 4.3% annual rate.
The median forecast for real GDP growth for 2021 was lowered to a 3.6% annual rate, compared with a 4.8% rate forecast in the last survey in June.
Slower growth will make it harder for unemployed workers to find new jobs.
According to the survey, more than half of the economists think that between 10%-20% of jobs lost during the pandemic won’t come back.
The economy recovered over the summer after the 31.4% decline in the April-June quarter, the largest on record.
Economist forecast growth at a 25% rate in the third quarter. But this was widely expected as the strong initial phase of the recovery that started in May.
Economists are divided over when the economy will return to pre-pandemic GDP levels, with roughly a third saying the second half of 2021, a third saying the first half of 2022 and a third believing it will be towards the end of that year.
The economists think that the risks for the economy underperforming outweigh the risks it will do better than expected. The biggest concern is a second wave of the coronavirus.
There isn’t much concern about a double-dip recession. Roughly half of the economists say the odds of a double-dip recession are below 20%. Only one out of eight panelists see the odds of another downturn above 50%.
Economists expect the Federal Reserve to hold interest rates close to zero through 2021. More than 70% of economists said they didn’t change their forecast for Fed policy, even with the central bank’s announcement of a new strategy to allow inflation to run above 2% for some time.
