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[Ferro-Alloys.com] US gross domestic product (GDP) will not reach its pre-pandemic levels until well into 2022 following a sharp contraction this year, economists with major US banks said.
"At the end of 2020, we still will have not recovered from the depth of the second quarter decline," US bank Citi managing director Catherine Mann said, presenting an outlook on behalf of the American Bankers Association's economic advisory committee of chief economists at US banks.
The committee expects the US economy to decline by 5.7pc this year, followed by a 4.5pc increase next year. The committee expects US GDP to recover to pre-2020 levels no sooner than the second quarter of 2022. The unemployment rate is projected to be around 10pc at the end of the year, from a projected second quarter high of 16pc.
"What we see on GDP is bad enough, but the situation for consumption and investment is worse," Mann said. Consumer confidence remains slow, dragging spending in the category that accounts for 70pc of US GDP. "Consumer spending may be constrained for some time, with consumers unsure about job security and pay."
And consumer behavior during coming months remains unpredictable: "How long will it take before most people feel safe enough to visit stores, restaurants and movie theaters?" Mann wondered.
Business investment is also expected to recover slowly, Mann said, noting that "businesses will be in a ‘wait and see' mode, trailing the consumer."
The economists' committee expects business investment to continue declining in the third quarter even though consumer spending is expected to begin to recover, helping to push GDP growth into positive territory in that three-month period.
Source: Argusmedia
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