The U.S. economy could be back on track for 4.5% growth in the fourth quarter, a Nationwide economist said today.
The key is to get the COVID-19 pandemic under control relatively quickly, added Ben Ayers, senior economist for Nationwide.
"We expect the rebound in Q4 to be pretty good," Ayers said during a webinar hosted by the National Association for Fixed Annuities.
But while 4.5% growth in the gross domestic product would certainly be good news, there is some pain to be felt first. The second-quarter GDP loss could be 10% or more, Ayers said. He is projecting a smaller -1.5% third quarter.
"All of this depends on the virus very shortly getting better," Ayers said. "By mid-summer, maybe a little earlier than that."
U.S. pandemic experts are skeptical on whether the country can get COVID-19 under control that quickly. During a Monday press conference, Trump administration experts cited a model produced by the Institute for Health Metrics and Evaluation at the University of Washington in Seattle. It forecasted peak coronavirus health impacts in mid-April.
If the U.S. is able to overcome the virus in a few months' time, Ayers is predicting robust 4% average growth rates for the first three quarters of 2021.
Only the worst economic crashes in American history -- the Great Depression of 1929-37 and the Great Recession of 2008-09 -- are suitable parallels for what has happened in the past month, Ayers said.
And even then, nothing in history matches how fast the economy crashed. In the past month, we have seen eight trading days with a plus or minus 5% swing in the markets -- usually minus.
"For financial markets, it’s still hard to tell where things are going to go," Ayers said. "There’s still going to be a lot of reaction to what’s happening in the news, but we’ve seen a calming here in the past week or two."
Congressional passage of a $2 trillion emergency stimulus package last week helped calm the markets and will be a big help, Ayers said. Consumer balance sheets are in much better shape than they were in 2008-09, he added, which will help the economy stay afloat.
"For consumers, it's really just trying to keep folks on payrolls and put cash in the hands of consumers to keep the economy flowing," Ayers said. "All this stimulus will help to boost the economy and keep the low from being as low as it could have been."
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at [email protected]. Follow him on Twitter @INNJohnH.