The U.S. economic recession underway, caused by the coronavirus pandemic, will be worse than previously thought, with more economists polled by Reuters over the past week expecting a 'U-shaped' recovery rather than any other option.
BENGALURU - The U.S. economic recession underway, caused by the coronavirus pandemic, will be worse than previously thought, with more economists polled by Reuters over the past week expecting a “U-shaped” recovery rather than any other option.
So far, the U.S. Federal Reserve’s policy of zero interest rates and unlimited asset purchases - which will likely expand its balance sheet to $10 trillion this year, according to the poll - as well as $2.3 trillion of federal government spending, have only softened the blow. But economists, who have spent the last several weeks slashing forecasts by greater and greater amounts, were more doubtful than ever about the country’s growth outlook, now that the longest expansion on record has abruptly ended.
After more than a month of financial turmoil, including the biggest Wall Street crash since 1929, volatility remains high in global markets. While the poll predicted a 12% rebound in the third quarter and 9% in the fourth, compared with 10.5% and 5.4% in the previous poll, more than 80% of respondents said the risks to their GDP forecasts in the second half of 2020 were skewed more to the downside.
Still, economists said the outlook could be far worse and prolonged, depending on the pandemic’s course.
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