Economists worried about US fate: Bloomberg publishes downturn forecasts for world’s first economy

The pandemic-provoked crisis was supposed to be the shortest on record in the United States. However, it leaves too many “scars” in the American economy.

Economists worried about US fate: Bloomberg publishes downturn forecasts for world's first economy

It was reported by the Bloomberg agency.

With the total number of infected Americans exceeding 5 million, wage growth in the United States has stalled, and the number of citizens who have been unemployed for almost 4 months has reached 8 million. As noted in the agency, such figures show that the economic downturn will be prolonged, and the recovery – vague.

When negotiations on the extension of state support fell through in Congress, Donald Trump signed orders to provide citizens with limited unemployment benefits, although the legality of the decision is questioned by experts.

Michael Feroli, chief economist at JPMorgan Chase & Co, is confident that Trump’s moves pose “some risk of worsening forecasts as they release pressure on Congress to pass something more comprehensive.”

Economists at Goldman Sachs Group took a different view, saying that as new unemployment benefits could run out in a month, it could put pressure on lawmakers.

In any case, Bloomberg notes that some of the long-term effects of the virus on the economy and labor market are already showing. While the economy is forecast to pick up in the third quarter, it will take many years to recover to pre-crisis levels.

“This slowing downward trend in economic recovery is a serious concern,” said economist Daniel Zhao. “The risk is that it will spill over to businesses and the rest of the economy, as well as households.”