Published Friday, October 23, 2020, 10:30 p.m. EST
The shape of the economic recovery is coming into clearer focus. Yes, the United States has had a "V-shaped" recovery from the onset of the Covid outbreak in January. However, the right side of the "V" is weakening. A return to the level of prosperity of late 2019 is about 18 months away, while a recovery to the full potential of the U.S. -- in which the unemployment rate drops to 3.5% again -- is at least several years away.
The 60 economists surveyed in mid-October by The Wall Street Journal reportedly expected a U.S. third quarter growth rate of +28.5% over the rate of the third quarter of 2019. (Though the third quarter of 2020 ended September 30, the actual official growth rate is not yet released.
Their outlook was for a sharp deceleration in the fourth quarter to 4% and settling over the next six quarters, to 3.1% in the second quarter of 2022.
The consensus forecast in the dotted lines offers better perspective on the shape of the recovery.
The initial recovery from the pandemic was V-shaped but the deceleration is expected to veer the growth rate to the right.
To get back to the $19.3 trillion economy of late 2019, the experts say, will take until the first quarter of 2022 -- 18 months from now.
To make a full recovery -- as if Covid never happened -- will the red dotted line in this chart would have to meet the grey dotted line. It could be several years off, or longer.
The Standard & Poor's 500 stock index closed Friday at 3,465.39, a gain of +0.34% from Thursday. That was down -0.53% from a week ago. Since the March 23rd bear market low, the S&P 500 soared to return +43.06%.
The half-point drop was the first weekly loss in a month. With an election days and uncertainty over its outcome, a deceleration to the +4% forecasted growth rate in gross domestic product should be comforting to the long-term investment outlook. However, stock prices have swung wildly since the coronavirus crisis hit the stock market early this year and volatility is expected in the months ahead.
Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial or tax situation, or particular needs. Product suitability must be independently determined for each individual investor. Tax advice always depends on your particular personal situation and preferences. The material represents an assessment of financial, economic and tax law at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions. Any investments or strategies referenced herein do not take into account the investment objectives, financial situation or particular needs of any specific person. The material represents an assessment of financial, economic and tax law at a specific point in time and is not a guarantee of future results.
This article was written by a veteran financial journalist based on data compiled and analyzed by independent economist, Fritz Meyer. While these are sources we believe to be reliable, the information is not intended to be used as financial advice without consulting a professional about your personal situation. Indices are unmanaged and not available for direct investment. Investments with higher return potential carry greater risk for loss. Past performance is not an indicator of your future results.
August Retail Sales Indicate The Recovery Is Intact
This Week’s Financial Economic News
Latest Financial Economic News For Investors
After Fed Inflation Policy Speech, Stocks Closed At New Record High
Stocks Closed 1% Off All-Time High; Strong New Economic Data
Stocks Broke Record High Again This Week
U.S. Jobs Picture Improved, Covid Variant Risk Declined, And Stocks Closed Week At Record
This Week’s Economic And Investment News
Positive Earnings, Housing, and LEI News; Stocks Closed Week At A Record
Today Versus Post-War History Of U.S Economic Cycles
Stocks Surged 1.1% Today, Closing At A Record High For The Third Straight Week
Strong Jobs Report Confirms Recovery
What's Ahead For The Second Half Of 2021?
Despite Strong Economic News, Stocks Dropped This Past Week
Stocks Closed At A Record High; What's Expected For The Rest of 2021?
Jobs Situation Report Pushes Stocks A Fraction From All Time High
Inflation Rate Doubled In Past Two Months
Fed Signals It's Thinking About Starting To Talk About Tightening
Expect Inflation To Make Investors Nervous Through 2021
Stocks Closed At A Record, Ignoring A Bad Jobs Report
Stocks Soared 5.2% In April; Now, For The Good News
A Window Of Opportunity Is About To Close
Retail Sales, Housing Starts, And Stocks Rocket Higher
The Fed Is Not Braking The Boom Anytime Soon
As your financial partner, our mission is to provide you the information you need to make the choices that matter most in your life.
August Retail Sales Indicate The Recovery Is Intact
Retail sales for the 12 months through August rose 14.9%. According to the U.S. Census Bureau, retail sales totaled $618.7 billion in August, a seven-tenths of 1% jump from July.
