The U.S. economic recovery has been dented in the third quarter of the year, partly on the spread of the Delta strain of COVID-19. Remarkably, economists polled by Reuters are pushing their expectations back to November for when the Fed announces an impending policy shift.
As we know, the U.S. economy is facing global supply chain disruptions due to the COVID-19 pandemic, which have also pushed up inflation. However, economic disruption in many parts of the country has been sharp as the Delta variant spreads, especially among unvaccinated individuals.
According to many economists, the growth slowdown will be short-lived, and so far have not made any significant changes to a strong outlook for 2022.
U.S. President Joe Biden’s mandates to encourage Americans who are not vaccinated to get a shot. However, children heading back to school and some companies continuing with return-to-office plans could still aggravate the risk of further spreading the virus.
Reuters poll shows that the median third-quarter growth forecast in the September 13-16 was slashed to a 4.4% seasonally adjusted annualized rate from 7.0% just a month ago. Notably, it is well below Q2’s 6.6% growth.
Meanwhile, the fourth-quarter median was cut to 5.1% from 5.9%.
However, the growth outlook for 2022 is a still-robust 4.2%, unchanged from the August poll. However, for 2023, the growth outlook is 2.3%, only slightly lower than the 2.4% estimate last month.
U.S. workers now have a 5.8% chance of losing their jobs in any given quarter
Additionally, the unemployment rate was anticipated to remain above its pre-pandemic level of 3.5% at least until 2023.
Reuters analysts expect the taper to start in December with monthly reductions of $10 billion in purchases of Treasuries. Significantly, a majority of economists anticipated it to end in the third quarter of 2022.
The Core Personal Consumption Expenditures Price Index, which registered its biggest rise since 1991 in June – was anticipated to remain above 3.5% per quarter on average for the rest of the year.
Core PCE inflation was anticipated to cool slightly but remain above the central bank’s 2.0% target until 2023.
Notably, U.S. workers now have a 5.8% chance of losing their jobs in any given quarter. ITIF announces that policymakers should embrace measures to speed up innovation.
As we know, the COVID-19 pandemic led to a spike in lost jobs in the second quarter of 2020. Remarkably, the leisure and hospitality industries were hit the hardest at 45%. However, the third quarter of 2020 shows that job loss rates continue to decline among all sectors, with the leisure and hospitality industry returning down to 9%.