Orange County Partnership - News

Economic Forecasts are a Mixed Bag

Forecasts for the hoped-for recovery of the U.S. and New York State economies are mixed with some offering optimistic views that a recovery is now in the works and will pick up steam in the third and fourth quarters of this year.


Other prognosticators are predicting a more measured recovery due to the incredible damage caused by the pandemic and the lockdowns that followed and outbreaks now taking place in multiple states that had loosened COVID restrictions.


White House economic adviser Larry Kudlow recently said the U.S. economy is “now in a recovery stage.” He added, “I think we are on our way back. 2021 is going to be a solid, solid year.”


Kudlow, according to a Voice of America report, noted that the $600-a-week unemployment compensation supplement the federal government has been paying more than 40 million unemployed workers in addition to state jobless benefits is likely to end as scheduled at the end of July. Kudlow related that the Trump administration is envisioning “some kind of bonus to return to work” for those who have been laid off, although not as much as the weekly federal unemployment compensation supplements that have been paid for more than two months.


Although upbeat on the nation’s economic future, Kudlow did say that the continued rise in COVID-19 hospitalizations in a number of states “is a concern” that could dampen the expected economic recovery.


Federal Reserve Bank of Boston President Eric Rosengren told the Wall Street Journal recently that the U.S. central bank and federal government will need to do more to help the economy emerge from the negative impacts of the coronavirus pandemic.


“Unemployment remains very high, and because of the continued community spread of the disease, and the acceleration of new cases in many states, I expect the economic rebound in the second half of the year to be less than was hoped for at the outset of the pandemic,” he said.


On June 25, the U.S. Labor Department reported another 1.5 million workers filed new claims for state unemployment insurance the previous week—the 14th week consecutive week the figure had exceeded one million.


The total number of people collecting state unemployment insurance was 19.5 million, down from nearly 25 million who filed claims in early May.


The latest employment data comes as New York and some other places that were hard hit by the pandemic early on are now in the throes of reopening their economies. However, there are has been a stubborn spike in COVID cases in some states, such as California, Florida, South Carolina, North Carolina and Arizona, that are raising fears of new setbacks there, according to a New York Times report.


“The renewed outbreak will hinder the recovery,” said Carl Tannenbaum, chief economist at Northern Trust in Chicago. “I can’t help but think that the willingness of consumers to be in crowded places has diminished. It’s going to be a long haul to get back to where we were before the pandemic.”