BENGALURU- US economic growth will lose momentum this quarter and next but expand faster than previously thought after that, according to a Reuters poll of economists, a firm majority of whom now expect the economy to reach pre-COVID-19 levels within a year.
While the near-term economic outlook has dimmed again as the US remains the country worst-hit by the pandemic and on uncertainty about a fresh fiscal package, Wall Street stocks have reached record highs on positive vaccine news.
The growth outlook for the current and next quarters was lowered in the Nov. 30-Dec. 8 poll. A few respondents predicted a doubledip, expecting the economy to contract again next quarter.
But in response to an additional question, nearly two-thirds of economists, or 43 of 69, said US GDP would reach pre-COVID-19 levels within a year. Twenty-one said within two years and five said two or more years.
That is a turnaround from the August poll findings, where none of the economists said “less than a year”, with nearly 60 percent predicting the economy would take two or more years to reach pre-pandemic levels.
The wider poll showed GDP for Q3 is expected to remain unrevised at a record 33.1 percent when the final data is issued later this month, after contracting at an annualized 31.4 percent pace in Q2, its sharpest decline in at least 73 years. It was expected to grow 4.0 percent this quarter, compared to 3.7 percent predicted previously.
For the first quarter the consensus was lowered to 2.5 percent growth from 3.0 percent last month, with nearly 11 percent of respondents predicting the economy would contract in Q1.