This week, a number of economic indicators showed just how shaky the US recovery from the coronavirus pandemic has become even though the worst of the recession is likely over.
US GDP fell a record 33% in the second quarter, initial jobless claims ticked up for the second week in a row, and consumer sentiment slumped further.
Going forward, these are five hurdles that the economic recovery from the pandemic recession faces.
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This week, a number of economic reports showed just how much the coronavirus pandemic hit the US economy, and that the recovery from the pandemic recession is still fragile even as states reopen.
On Thursday, the Commerce Department released figures showing that US gross domestic product slumped a record 33% in the second quarter due to the impact of sweeping shutdowns to contain the spread of coronavirus. The backward-looking report, which reflects the months of April, May, and June, showed just how deep of a hole the pandemic has caused for the US economy, and shaped what a full recovery will require.
While the GDP report was slightly better than economists’ expectations, and though some states have continued with reopenings, furthering economic activity, industry watchers caution that the road ahead isn’t clear.
“Financial markets are already priced for a vigorous recovery, but with virus fears on the rise, jobs being lost and incomes being squeezed as unemployment benefits are cut, we feel the recovery could be much bumpier,” said James Knightley of ING in a Thursday note.
On Wednesday, Federal Reserve Chairman Jerome Powell highlighted the increasing economic uncertainty in a speech following the central bank’s policy meeting, in which it decided to hold interest rates near zero.
Read more: A Wall Street quant chief breaks down why a COVID-19 vaccine is not the silver bullet investors have been hoping for — and warns another stock-market meltdown is likely
“We have seen some signs in recent weeks that the increase in virus cases and the renewed measures to control it are starting to weigh on economic activity,” said Powell. “The path forward for the economy is extraordinarily uncertain and will depend in large part on our success in keeping the virus in check.”
Other troubling reports added to worries that the economic recovery is on less than stable footing. Also on Thursday, initial jobless claims increased for the second straight week, breaking a months-long streak of declining claims.
On Friday, two reports gave a snapshot of how consumers are feeling. The University of Michigan’s consumer sentiment index fell to 72.5 at the end of July, according to a report. For June, personal income slumped as the impact of government stimulus checks faded, but consumer spending gained 5.6% after a record jump in May.
Here are the main factors that still stand in the way of the economic recovery from the pandemic recession, the sharpest downturn since the Great Depression.
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Source:: Business Insider