The JPMorgan economists become the first to disagree with Wall Street's forecast of 2021 Q1 showing positive economic growth and instead say that due to the recent surges in covid cases the first quarter of 2021 will be negative. They see the economic growth shrinking down by one percent in the first quarter and then rising to 4.5 in the second quarter and rising even more to 6.5 in the third quarter of 2021.This all being said JPMorgan economists still think that the year 2021 will be met with good expansion in the second and third quarters due to the hopeful development of a vaccine . Not only are they predicting that the positives of a vaccine will help the economy but more stimulus checks will help the economy to see increased growth in the second and third quarters as well. In the end, the JPMorgan economists believe that this growth we were experiencing in the months after the shutdown was the economy opening up but now the majority of the economy is opened and running and now we are facing restrictions that will slowly close the newly opened economy, Sadly the side effects will be decreased growth from q4 of 2020 to q1of 2021. Hopefully, the positives of a vaccine and more financial help from the government will help the economy grow and move past the restrictions after they are implemented in 2021.
https://www.cnbc.com/2020/11/20/jp-morgan-says-first-quarter-gdp-will-decline-because-of-rising-covid-cases-and-restrictions.html
6 comments:
It is no secret that there are talks of another shutdown. If this were to happen, I think it is 100% possible that economic growth will suffer in q4 of this year and q1 of next year even with the hopes of a vaccine. If the vaccine does indeed come during the beginning of the year next year, I think it is likely that growth will increase once more in a similar fashion we are seeing right now due to opening the economy once again.
I think it is good that economists from private companies are disagreeing with each other, as this creates a diversity of opinions that is more likely to include an accurate prediction than if all firms offered the same projection. I agree with JPMC's analysis that there will be negative growth in the first quarter of next year, as it is unlikely a vaccine will be ready by then. In the meanwhile, before a vaccine is ready, the economy is likely to suffer, as we have seen talks of record high evictions and other indications of a poor economy. However, once the economy does rebound, post-vaccine, growth will inevitably be very high. Like China, who experience massive growth rates because of a large "room for improvement" from a previously poor-performing economy, the U.S. economy will see large growth from the previously poor performing Covid-economy.
I also agree that having varying opinions is important in business. I believe many have been too optimistic instead of being realistic. The pandemic has reached all-time numbers in the past week and shows no signs of slowing down. Obviously the goal of firms is to maximize profits for their shareholder's but this may not be completely possible due to our current situation.
Seeing as the number of Covid-19 cases are going higher by the day and there is talk of a second wave, a shutdown seems imminent. If that indeed happens, it'll be like the second quarter of the year all over. Businesses would feel the losses once more. So it is plausible that q4 growth of 2020 and q1 growth of 2021 would shrink.
There have also been concerns about the vaccine specifically its handling seeing as it needs extremely low temperatures to store it safely without reducing its efficacy. So again, it's looking like growth will shrink marginally for these quarters, and hopefully, when more people get the vaccine, economic growth begins to rise again
I agree with Max in regards to having private companies disagree with each other which allows for a greater chance at someone presenting an accurate projection. Moreover, I would agree with the JP Morgan analyst in terms of Q1 growth being negative. However, I am not as optimistic as they are about Q2 growth. We are on a right path towards a vaccine, however my concern is the availability of the vaccine. Will we be able to immunize more than 50% of the country by the beginning of Q2? If not, I could see growth in Q2 being negative.
I think that if/when Biden gets more financial help passed that will help the economy grow. Hopefully around the same time or soon after the vaccine distribution will occur so we can continue to see better growth.
Post a Comment