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The Epidemic Sets The Economy Back About Two Years

(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.

The Standard & Poor's 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. It is a market-value weighted index with each stock's weight proportionate to its market value. Index returns do not include fees or expenses. Investing involves risk, including the loss of principal, and past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance quoted.

Nothing contained herein is to be considered a solicitation, research material, an investment recommendation, or advice of any kind, and it is subject to change without notice. It does not take into account your investment objectives, financial situation, or particular needs. Product suitability must be independently determined for each individual investor.

This material represents an assessment of the market and economic environment at a specific point in time and is not intended to be a forecast of future events or a guarantee of future results. Forward-looking statements are subject to certain risks and uncertainties. Actual results, performance, or achievements may differ materially from those expressed or implied. Information is based on data gathered from what we believe are reliable sources. It is not guaranteed as to accuracy, does not purport to be complete, and is not intended to be used as a primary basis for investment decisions.

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This article was written by a professional financial journalist for Responsive Financial Group, Inc and is not intended as legal or investment advice.

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