Forecasters See Full Economic Recovery By End Of 2021

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The US economy’s growth is slowing as 2020 comes to a close, but a growing number of economists expect it to recover to its pre-pandemic strength in the second half of next year, as vaccines for the coronavirus become widely distributed.

That’s the view from the latest survey of the National Association for Business Economics (NABE). It found that 73% of surveyed forecasters say the economy will return to its pre-pandemic level by late 2021. This reflects greater optimism than the forecasters had expressed a couple of months ago when just 38% of them said they thought a full recovery could occur next year.

Economists have been saying for months that only when vaccines are widely available to control or defeat the virus will the economy be able to sustain a meaningful recovery from the worst economic downturn since the Great Depression.

Hopes that one or more coronavirus vaccines will roll out soon are helping to drive expectations higher, said the survey’s chair, Holly Wade. “NABE panelists have become more optimistic, on balance, with nearly one-third revising their outlook higher based on recent news of effective vaccines, Wade said.

Pharmaceutical companies are asking US regulators to allow the use of their vaccines after reporting encouraging data from clinical trials. The hope is a wide rollout would mean fewer restrictions on businesses next year and more confidence among consumers to spend.

In the meantime, the economy is struggling to gain traction. Measures of consumer confidence, which is critical to spending and growth, remain well below their pre-pandemic levels.

Last Friday, the government reported that employers sharply scaled back hiring in November, adding only 245,000 net new jobs — the fewest since April and the fifth straight monthly slowdown. The report provided the latest evidence that the job market and economy are faltering in the face of a virus that has been shattering daily records for confirmed infections in recent weeks.

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