New economic forecast is both upbeat and cautionary

 

The United States economy is bouncing back rapidly from the severe and unprecedented pandemic-driven downturn that began early this year, according to a new economic forecast released today at the 11th annual Inland Empire Economic Forecast Conference.To get more economy news today, you can visit shine news official website. 

 Despite the alarming and record-breaking decline in economic output that occurred in the 2nd quarter, and the ongoing painful effects of the COVID-19 epidemic itself, the economy remains fundamentally strong, and in many ways is already rebounding. “The United States hit its low point in the current downturn back in April, and since that time the nation’s economy has been moving back towards more normal levels of economic output,” said Christopher Thornberg, director of the UC Riverside School of Business Center for Economic Forecasting and one of the report authors. 

“As odd as it may sound, technically, this recession is over, making it the deepest, but shortest in U.S. history.” Thornberg emphasizes that this does not mean harsh recessionary effects are not still being felt, especially among some industries and individuals, but that everything from the unemployment rate to the rate of job recovery to consumer spending indicate that the economy is growing. Moreover, as spending has been curtailed for the past seven months, the ‘fuel’ that has built up in the form of increased wealth and savings is waiting to set off a vigorous expansion once the virus is controlled. 

 Despite the ostensible contradiction of a deep, short recession, the new forecast argues that as dramatically bad as the 2nd quarter numbers were, the pandemic-driven shocks to the economy were largely transitory and not based on any fundamental financial or economic imbalance. Today, the share of the U.S. labor force that is truly unemployed (meaning workers who have permanently lost their jobs or are actively looking for new work) stands at just under 5%, significantly lower than the 8% plus rate seen at the peak of the Great Recession. 

Workers who consider themselves temporarily laid off make up about 3% of the current U.S. unemployed workforce. The new forecast includes outlooks for the U.S., California, and Inland Empire economies. Across geographies, the forecasts are relatively rosy but come with a key caveat: Full recovery and resumption of economic activity/output is firmly dependent on containing the spread of the COVID-19 virus.