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Overall Economy Is Recovering Faster Than Economists Expected

Wall Street Journal (09/10/20) Torry, Harriet; DeBarros, Anthony

The economy and labor market are recovering from the coronavirus-related downturn more quickly than previously expected, according to a survey of 62 economists by the Wall Street Journal. Economists expect gross domestic product to increase at an annualized rate of 23.9% in the third quarter, which is sharply up from an expectation of an 18.3% growth rate in the previous survey. The forecast for fourth-quarter growth is for a 4.9% annual rate, suggesting the recovery will be protracted. The average forecast called for GDP to shrink 4.2% this year, measured from the fourth quarter of 2019, an improvement from the 5.3% contraction anticipated in last month’s survey.

Economists continue to believe the economy already is in a recovery. Some 82.4% of economists said the recovery started in the second or third quarter of this year, broadly unchanged from last month’s survey. They see faster improvement in the labor market. Economists now expect the jobless rate to tick down to 8.1% in December, after forecasting a 9.0% unemployment rate for the end of the year a month ago. Nearly half of economists surveyed—49.1%—expect the reduction in federal jobless benefits to dent consumer spending and retail sales in September, while 27.3% expect to see the impact in data for August.

Read the full article here.