Economists: Stimulus, Vaccine Key To Full Recovery By Year-End 2021

The U.S. economic slowdown fueled by the COVID-19 pandemic is likely to continue into 2021 but could start bouncing back by mid-year as the population gets vaccinated, according to the December survey from the National Association for Business Economics (NABE).

The survey of 48 professional forecasters indicated that 73 percent expect the economy to see pre-pandemic recovery by late 2021. Several months ago, 38 percent of forecasters surveyed didn’t think a recovery would happen before 2022.

“NABE panelists have become more optimistic, on balance, with nearly one-third revising their outlook higher based on recent news of effective vaccines,” Holly Wade, the survey’s chair, said in the survey. She is also the executive director of NFIB Research Center. 

The second biggest economic risk factor cited by 27 percent of forecasters surveyed was “inaction” by the federal government to release additional stimulus, the Associated Press reported on Tuesday (Dec. 8). Some 57 percent said that another wave of the virus is the biggest overall factor affecting the economy’s future. 

Manuel Balmaseda, president of the NABE and CBE and chief economist at CEMEX, said in the survey that the median forecast of a 4.1 percent expansion of real gross domestic product (GDP) “would reverse much of the 32 percent annualized decline from the second quarter.”

He added that the survey panel is “slightly less bullish about 2021,” with anticipated 3.4 percent growth in real GDP, which is “slightly less than the 3.6% forecasted in the October survey.” 

A report earlier this month showed that November jobs were up 307,000 in all private sector industries, but missed economists’ forecasts of 410,000 and October’s 404,000. New restrictions due to a second wave of the pandemic have further stifled the recovery of the labor market. 

The jobs report last week showed a scaling back of new hires in November, adding 245,000 jobs and below the 440,000 job gains that economists had forecasted.  U.S. unemployment rate fell to 6.7 percent in November from October’s 6.9 percent.