Question

Discuss the current state of the economy and whether forecasters are predicting that the economy will continue to expand or whether a recession is coming.

Answer 1

The second quarter (Q2) of 2020 was worse than the first, which was decimated by the COVID-19 pandemic. Growth declined by 5% in the first quarter, signaling the onset of the 2020 recession.1 In Q2, the economy contracted 31.7%.2 The Congressional Budget Office (CBO) predicts the third quarter will improve, but not enough to make up for earlier losses.3

In April, retail sales were down 16.4% as governors closed nonessential businesses. The number of unemployed shot up to 23 million amid companies furloughing workers.4 However, estimates for U.S. retail and food sales in August 2020 show a small increase of 0.6%. month over month from July.5

According to the most recent forecast released at the Federal Open Market Committee (FOMC) meeting on Sept. 16, 2020, U.S. GDP growth is expected to contract by 3.7% in 2020. It may rebound up to a 4.0% growth rate in 2021. Growth could slow to 3.0% in 2022, and 2.5% in 2023

The path of the economy will depend significantly on the course of the virus . the Fed admits the economic recovery has progressed at a much faster pace than previously expected. But that praise comes with a sizable caveat — the road to recoverym be long and winding with several hills to climb