US Economy Expected to Recover at Faster Pace Due to Biden’s Stimulus
A recent Reuters poll forecasts that the latest round of fiscal stimulus measures worth $1.9 trillion proposed by President Joe Biden could help boost US economy’s recovery and help it reach pre-pandemic levels as soon as within the next six months. However, unemployment levels could take more than year to come back down after the pandemic caused millions of Americans to lose their jobs.
Following a 3.5% contraction through 2020, the US economy is expected to post a growth of 5.7% in 2021. This is the most optimistic outlook for US GDP among economists polled by Reuters since the survey first started over two years ago. In addition, 85% economists indicated a rebound in the US economy within a year, of which over 60% of economists expressed hope that the US economy could rebound within six months.
The next round of stimulus measures soon to be rolled out, in addition to pent-up demand and a large amount of savings accrued through the lockdown period are likely to spur consumer consumption levels, helping output rebound by the mid of this year. Economists also remain hopeful of economic recovery following President Biden’s assurance that all adults in the country could be vaccinated before June.
Biden’s COVID-19 relief package could propel the US economy to post a GDP of +4.8% in Q1, and then grow by 7.2%, 7.1% and 5% in the subsequent quarters of the year. These estimates are far higher than those made in the previous edition of this poll, especially the 2.8% growth forecast for Q1 previously.
However, even as employment posted an improvement during the month of February, with the addition of more jobs and a reduction in the jobless rate, the latest NFP report indicates the severe extent of damage driven by the pandemic on the labor market. In the poll, more than 92% of respondents indicated that it could more than a year for the US unemployment rate to return to pre-pandemic levels.
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