We’re Already In A Recession, Economists Say

(FamilyRetirementClub.Com)- For those wondering whether a recession is coming as a result of the coronavirus pandemic, you can wonder no more: We are officially in a recession.
That’s what 45 economists said recently in a survey conducted by the National Association for Business Economics.
The economists polled in the survey predicted a “sharp, short recession” for the first half of this year while the pandemic “severely restricts economic activity.” The NABE said it anticipates that economic growth declined by 2.4% in the first quarter of 2020, and predicted it will drop a massive 26.5% in the second quarter.
The group says the U.S. unemployment rate may spike around 12% by the middle of the year, with the country losing a total of 4.58 million jobs in just the second quarter. With the loss of jobs will come a loss of spending, which will drag down the economy. Consumer spending is responsible for approximately 70% of economic growth.
Despite this bad news and the abrupt entrance into a recession, these economists believe the U.S. is braced for a nice bounce back at the end of 2020. They predict a growth rate of 6% by the end of the year. As Constance Hunter, the president for the NABE, said:
“The median forecast suggests conditions will improve by the end of the year with support from aggressive fiscal and monetary stimulus.”
A large part of that stimulus will come from the federal CARES Act that accounts for more than $2 trillion in aid to workers and businesses.
Another part is all measures the Federal Reserve is taking, including an addition $2.3 trillion in loans for consumers and small businesses it announced on Thursday. It is creating a Municipal Liquidity Fund to “help state and local governments manage cash flow stresses caused by the coronavirus pandemic.”
The Fed will be buying short-term debt from states, Washington, D.C., counties that have at least 2 million people and cities with more than 1 million people. As Jerome Powell, the Fed chair, said in a statement:
“The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible.”
The Fed will also boost the Main Street Lending program that helps small businesses, support the Treasure Department in for the CARES Act, and even supply money to banks that are participating in the SBA’s Paycheck Protection Program.
Economists are applauding the Fed’s drastic recent moves, which come after they’ve already announced bond buyback plans and slashed interest rates to near zero. Steve Friedman, the senior macroeconomist at MacKay Shields, said of the moves:
“Today’s announcements from the Fed represent an aggressive but appropriate expansion of its credit facilities, aimed at ensuring an ample supply of liquidity across the economy.”
And as RSM US’s chief economist, Joseph Brusuelas, said:
“The liquidity commitment put forward by the Fed strongly suggests that this is the latest in a series of policy steps to address the economic fallout of the pandemic and is not the final word. The Fed is clearly not out of ammunition, nor is it done exhausting its potential liquidity commitments.”