Experts have predicted a U-shaped recession for the US economy based on the key indicators. The COVOD-19 pandemic has continued to ravage the world economies and the United States is not immune to the devastating effects of the crisis. Experts have already predicted that the GDP growth rate could fall as much as 50%. The represents the same kind of depth experienced during the Great Depression,, with unemployment expected to be in the region of 30%.
While the indicators are looking too great for the US economy, experts are expecting light at the end of the tunnel with growth expected to pick up steadily post COVID—19. Experts predict that the U.S. GDP growth will slow to 2.0% in 2020 from 2.2% in 2019, 1.9% in 2021 and 1.8% in 2022. This is according to the Federal Open Market Committee.
Unemployment has already seen an unprecedented spike in the wake of the virus and it is predicted to average 3.5% in 2020, 3.6% in 2021, and 3.7% in 2022. These figures are lower than the projection of the Fed’s, which could mean some good news for US residents.
Inflation has been predicted to average 1.9% in 2020, rising to 2.0% in 2021 and 2022. The Fed prefers using the core inflation rate, which takes out the volatile gas and food prices. The core rate is currently at the Fed’s 2% target inflation rate, giving some room for lowering the interest rates.
The Federal Open Market Committee had a special meeting on March 15, 2020 to reduce the economic impact of the COVID-19 coronavirus outbreak, leading to the lowering of the fed funds rate to between 0.0% and 0.25%. The Fed is also working ensuring that long-term rates remain low.
While the current situation is seemingly at the rock bottom, the US economic outlook can be seen to be on the rise, all things being equal.
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