Weekly Investment Update
The Epidemic Sets The Economy Back About Two Years
Published May 29, 2020, 6:37 p.m. EST
The Coronavirus epidemic is currently expected to set back the U.S. economically by nearly two years. Here are the facts.
The size of the U.S. economy peaked at an annualized rate of $19.2 trillion in the fourth quarter of 2019. By comparison, the most recent forecast of 60 economists surveyed monthly by The Wall Street Journal is for the economy to bottom at a $18.2 trillion annualized growth rate in the fourth quarter of 2020. Then, the recovery begins.
The nation is not expected to return to the record $19.2 trillion GDP of late 2019 until the end of March 2022, nearly two years from now.
Another way of understanding the economic setback due to the epidemic: The gray line and purple dot illustrate what would have happened if the outbreak had not occurred. The gray line illustrates what might have happened if the economy had continued its 2.2% growth trajectory of the last expansion an 11-year boom. The economy would have grown to $20.2 trillion at the end of March 2022 versus $19.2 trillion a 5% difference in the size of the U.S. economy.
Closing Friday at 3,044.31, the Standard & Poor's 500 gained 3% last week, after gaining 3.2% a week earlier. The index is 30.6% off the March 23 bear market low.
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