Even as states begin to reopen from strict lockdowns implemented earlier this year to curb the spread of the deadly coronavirus, experts are warning that a second wave of infections could pose a serious threat to the U.S. economy.
The National Association for Business Economics' June Outlook released Monday found that 87 percent of economics believe a second wave of COVID-19 cases is the top risk for the U.S. economy this year.
The virus has killed more than 110,000 Americans, according to Johns Hopkins University data, and triggered a shutdown of the nation’s economy that is without precedent. Nonessential businesses closed and states directed residents to stay at home; in less than three months, close to 43 million Americans lost their jobs as a result of the shutdown.
But the labor market seemingly began to recover in May, signaling a stronger- and faster-than-expected recovery from the virus. The Labor Department said in its monthly jobs report that employers added 2.5 million jobs -- the highest on record -- in May, while the unemployment rate dropped to 13.3 percent, down from 14.7 percent in April.
“Barring a second surge of Covid-19, the overall U.S. economy may have turned a corner, as evidenced by the surprise job gains today, even though it still remains to be seen exactly what the new normal will look like," said Tony Bedikian, head of global markets at Citizens Bank.
Despite the promising report, 80 percent of NABE respondents said they were pessimistic about the U.S. economic outlook. By the final quarter of the year, the nation’s gross domestic product, the broadest measure of goods and services produced across the economy, is expected to decline by 5.6 percent -- the sharpest contraction since World War II -- after shrinking by a catastrophic 33.5 percent in the second quarter.
Most economists did not expect the nation to return to pre-crisis levels until at least the second half of 2021.
Conversely, 51 percent of economists believed that a vaccine for the virus was the biggest upside to the U.S. economy, while 29 percent said it was a “test and trace” policy that would mitigate the spread of the virus and allow for a broader reopening of the country.