Economic Newsletter

The well-telegraphed heat wave in economic activity is underway. Most key economic data for March exceeded expectations, punctuating a quarter that turned out to be considerably stronger than anyone predicted earlier in the period.

Spring has sprung, and the season of hope is resonating throughout the economy. After suffering a 3.5 percent contraction in 2020 – the steepest since demobilization in 1946 – real GDP is poised to surge as much as 7 percent this year, which would rival the biggest annual gains since World War II.

The bleak economic landscape that prevailed in the closing months of 2020 has not faded from the collective memory of the American public. With the pandemic still claiming too many lives and the economy still reeling from business restrictions and virus fears that hamper normal behavior, the lingering effects cannot be ignored.

It’s shaping up to be a cold winter for the U.S. economy, as the pandemic continues to rampage throughout the nation and wreak havoc on all forms of activity that involves in-person transactions. State and local governments are tightening business restrictions and urging residents to more diligently adhere to social distancing protocols.

We’ve always said that the health crisis would determine the path of the economy, and the latest news on the pandemic is concerning. Cases of the virus, hospitalization and mortality rates have surged to unfathomable levels, and health experts believe this distressing trend will accelerate after the holidays.

Like his former boss, President Barack Obama, Joe Biden will be inheriting a damaged economy when he takes office on January 20, 2021. The Covid-19 pandemic has not only sent the nation into its deepest recession since the 1930s, it is leaving indelible scars that will restrain activity for some time to come.

To say that uncertainty is rising would be an understatement. Political and policy uncertainties are surging with questions surrounding the next round of fiscal aid, questions around the outcome of the elections, questions around a peaceful transfer of power

Despite being portrayed as dismal scientists, we economists are not always pessimistic about economic prospects. In fact, we are happy to report that things are looking up in many respects.

The rebound in jobs, production and consumer spending in recent months strongly indicates that the recovery from the harsh Covid-19 recession is underway.

Just as government-mandated lockdowns sent the economy into a tailspin in March and April, the lifting of restrictions and the reopening of businesses propelled activity higher in May and June.

The healing process has begun. With important economic data for May now in the books, it looks like the economy hit bottom in April.

The coronavirus recession has hit the U.S. with tremendous force. Following the sizeable 4.8 percent contraction in GDP during the first quarter – putting an end to the longest expansion on record—activity is poised to plunge by a depression-like 30-40 percent annual rate in the second quarter.