The latest Reuters poll of economists showed that the US economic outlook is likely to deteriorate further, with no signs of recovery in sight until next year.
“US gross domestic product was forecast to shrink an unprecedented 35.0% this quarter after contracting 4.8% last quarter, on a seasonally-adjusted annualized basis.
That is gloomier than a median 30.0% contraction predicted a month ago. In a worst-case scenario, the economy will contract 41.5% this quarter.
The economy is forecast to grow 16.0% in the third quarter and 9.0% in the fourth quarter, compared with 12.0% and 9.0% in the previous poll. Under a worst-case scenario, however, it will contract 2.5% and 1.0% respectively.
The median 2020 GDP forecast showed a further downgrade to -5.7% from -4.1% predicted a month ago but was a touch better than the International Monetary Fund’s -5.9% prediction.
In a worst-case scenario, the economy was forecast to shrink 10.4% this year, suggesting a prolonged recession if there is a second wave of infections as is already hitting a few countries.
More than 85% of 48 economists said the Fed’s response to the pandemic was “about right”, responding to an additional question. But about 60% said the national fiscal response was “not enough”.”