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According to an analysis by JPMorgan, the US economy is expected to contract in the first quarter of 2021 due to the uncontrolled spread of COVID-19, which is forcing state and local governments to reimpose the restrictions.
“This winter will be bleak and we believe the economy will contract again in Q1, but at an annualized rate of ‘only’ 1.0%,” the forecast led by economist Michael Feroli revealed.
The current stage of the pandemic has seen the number of cases reach record levels, averaging more than 160,000 per day, well above the first highs in March and April.
While early congressional action helped prevent an even worse economic crisis, the recovery slowed as Congress failed to provide further relief.
“By far the evolution of the virus has been the most important factor shaping the outlook. But fiscal policy has been firmly in second place, ”the report notes.
Expectations that a $ 1 trillion relief deal will be reached in early 2021, along with renewed hopes that highly effective vaccines will be widely distributed by the middle of the year, led JPMorgan to forecast an economic resurgence that will see annualized growth in the third quarter reach an annualized rate. 6.5 p.
But the double dip recession means the outlook remains worse than it would have been had the virus been brought under control.
“Alas, some lasting damage still seems inevitable,” according to the analysis.
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