Business Economists See First-Half Recession, Second-Half Rebound

The COVID-19 pandemic has pushed the U.S. economy into a recession in the first half of the year, but a recovery will begin in the second half, according to the consensus forecast of 45 business economists polled by the National Association of Business Economists in early April.

First-quarter growth, adjusted by inflation, is seen declining at a 2.4% annual rate, followed by a 26.5% drop in second-quarter real GDP. In the third and fourth quarter, real GDP is expected to rise 2% and 5.8%, respectively. 

These headline forecasts, however, fail to show a wide disparity among expectations. The range between the five strongest and five weakest forecasts for second-quarter real GDP is -1% to -50%. For the third quarter, the comparable figures are from +2% to -12.6%. 

“The NABE Outlook Survey panelists believe that the U.S. economy is already in recession and will remain in a contractionary state for the first half of 2020, as the COVID-19 pandemic severely restricts economic activity,” said NABE President Constance Hunter, in a statement.

Despite that outlook, the NABE forecast is  more optimistic than many on Wall Street, even though some Street economists participate in the NABE survey. JPMorgan now expects a 40% drop in second-quarter real GDP, while Morgan Stanley is forecasting a 38% decline and Goldman Sachs 34%. 

Wall Street forecasts for the second half of the year, like NABE’s, call for a rebound.