According to the key economic indicators, the U.S. economic outlook is for a U-shaped recession. Non-essential businesses were ordered by governors to shut down due to the spread of the Coronavirus pandemic, and this might lead to the fall in GDP growth rate to as much as 50 Percent though it will not last long. Unemployment is expected to rise as high as 30 percent.
In the 1st quarter of 2020, the U.S. economy declined by 5 percent, signaling the 2020 recession. In April, companies furloughed workers resulting in an unemployment rate of up to 23 million. From these early indications, it’s evident that the second quarter of the U.S. economy is going to worsen as the economy of the U.S. is predicted to decline by about 38 percent by the Congressional Budget Office in the second quarter. The number of unemployed is expected to rise to about 28 million. The third quarter is expected to better, and improvements will be noted though it will not be enough to cover the earlier losses. The effects will continue lingering until the fourth quarter of 2021, with a higher unemployment rate.
U.S. Economic growth
The GDP of the U.S. is expected to contract in 2020 by 7 percent, and in 2021 it will rebound to approximately 5 percent and 4 percent in 2022. These statistics are according to the latest forecast released at the Federal Open market meeting on 10th June 2020.
The rate of U.S. unemployment
The unemployment rate in 2020 until the end is expected to be on the rise to roughly 9 percent and eventually drop to 6 percent in 2021 and 5 percent in 2022. The peak of unemployment was in April 2020 as it reached 14.7 percent as more than 19 million workers were declared redundant in response to the coronavirus pandemic
The inflation rate of the U.S.
In 2020 inflation is expected to average 0.8 percent and rise to 1.8 percent in 2021 and 1.9 percent during 2022. As a result of the core inflation rate strips out high gas and food prices and the rate is normally used by the Feds when they are settling monetary policy, and from the statistics, the core rate is going to be below the Fed’s target of 2 percent.
The chart below illustrates the economic outlook for the U.S. 2020,2021,2022
Oil and Gas Prices.
According to the U.S.An Energy Information Administration, crude oil prices are predicted to average $34 a barrel in 2020 and $49 a barrel in 2021. Oil prices are expected to rise through 2050. By 2050 the cheap sources of oil will have been exhausted, and hence, this will make the cost of crude oil production more expensive.
The Bureau of Labor Statistics usually publishes great detailed information about each industry and occupation. Not taking into account the Coronavirus pandemic effects, the BLS expects employment to increase by8.9 million jobs. Health care occupations will be on the rise, and this is because of the aging population. Technology and energy production jobs will also grow rapidly.
An occupation like production, administrative support, and sales are predicted to lose jobs because the jobs are being phased out by technological advancement, E-commerce jobs will lead to loss of retail sales jobs. Transport and warehouse jobs are to be on the rise.
Climate changes will continue to affect the economy. According to research from the Richmond Fed, it is estimated climate change will reduce U.S. economic growth by 30 percent by the next century. There are concerns from the Federal Reserve about how climate changes will affect the economy and ask banks to plan for economic impacts of extreme weather and have risk management plans for hurricanes.
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