Economists have not changed much about the best and worst-case scenarios of the recovery

After the August work report, Achieved results that exceeded expectations For American workers, economists are much more optimistic about unemployment by the end of the year.However, this optimism has not penetrated into the rest of their economic forecasts, partly because there is still a lot of uncertainty about the outlook for the rest of the year, and partly because The weekly payment of $600 is due on July 31 Because unemployed workers may have plunged millions of Americans into severe economic difficulties.

inside The latest version of our Economic survey,versus Global Market Initiative At the University of Chicago Booth School of Business, FiveThirtyEight asked 28 quantitative macroeconomists about the future of US GDP and the number of unemployed. We also asked them about the spending and saving habits of Americans. Economists believe that the spending and saving habits of Americans changed in August (and did not improve).

The recent work report seems to make experts a lot of I feel more optimistic about how quickly Americans can get back to work.just Two weeks ago, Our investigation team believes that the probability that the unemployment rate will drop below 10% in the third quarter of 2020 is only 29%. However, not only did the unemployment rate exceed the 10% threshold, it also dropped to 8.4% in the US Department of Labor Statistics’ The latest data. (Yes, there is Some frustrating situations For this reason, they did not proceed from the fact that work resumed faster than economists expected. ) This has caused our group to significantly lower their estimates of the unemployment rate for September 2020 and December 2020:

Unemployment is better than expected

According to the FiveThirtyEight/IGM Economic Survey, the unemployment rate for September 2020 and December 2020 is expected

September 2020 Prediction from
category August 10 September 8
Lower limit (10th percentile) 8.4% 7.1%
Median (50th percentile) 10.0 8.1
Upper limit (90th percentile) 12.0 9.3
December 2020 Prediction from
category August 10 September 8
Lower limit (10th percentile) 7.7% 6.2%
Median (50th percentile) 9.6 7.6
Upper limit (90th percentile) 12.7 9.6

The predictions were made on August 10 and September 8.

Source: 55/IGM COVID-19 Economic Survey

“Last month’s unemployment rate dropped unexpectedly and sharply, not because our survey was temporary, but because it reflected a more permanent decline,” he said. Allan Timmermann, Is an economist at the University of California, San Diego. He has been investigating with FiveThirtyEight.

For example, the unemployment rate estimated by the survey team for December is now 2 percentage points lower than the unemployment rate we requested a month ago. Our group currently believes that between now and the end of this year, there is a 63% chance that the unemployment rate will fall below 8%.

Last week’s work report Not the first It turns out that this is much more pleasant than the predictions of most observers. (It turns out that it is difficult to predict economic recovery during a pandemic.) Unemployment indicators are especially difficult to solve because they point in different directions-for example, even if the unemployment rate is falling. , State-level unemployment claims Still the highest in history.

Jonathan WrightEconomists at Johns Hopkins University have been consulting with FiveThirtyEight, and he said that household surveys that form the basis of the unemployment rate may not explain the problem.That survey has one A fairly strict definition of unemployment -It does not include people who may be unemployed or lose income, such as part-time workers or people who are not actively looking for work due to the pandemic. Wright said: “The broader notion of underemployment is still drawn badly.”

Economists also believe that racial inequality in unemployment- Big problem In the August employment report-it will not be better by the end of the year. The survey team predicts that the median unemployment rate for black workers in December was 11.9%, and that by the end of the year, the unemployment rate for this group was at least double digits, with a probability of at least 90%. Although the unemployment rate for Hispanic workers is expected to be slightly better (9.3%), the unemployment rate for black and Hispanic workers is expected to be significantly higher than that for white workers in December.This explains the panel’s Best case The unemployment rate for Hispanic workers (7.8%) is only slightly higher than the forecast Worst case For white workers (7.9%), this in turn is Best case Black workers (10.1%).

Racial inequality in unemployment may persist

According to the FiveThirtyEight/IGM Economic Survey, the actual August 2020 figures by race and the predicted U.S. worker unemployment rate in December 2020

Unemployed in December 2020*
Worker race Unemployed in August 2020 Best case median Worst case
White 7.3% 5.4% 6.4% 7.9%
Hispanic 10.5 7.8 9.3 11.3
Black 13.0 10.1 11.9 14.0

*The prediction confidence interval from the survey panel. The best-case and worst-case scenarios quoted the 90th and 10th percentile forecasts of the expert group respectively.

Source: 55/IGM COVID-19 Economic Survey

It is worth noting that economists’ optimism towards the overall economy has not really been strengthened. On the contrary, there is still great uncertainty about the economic growth for the rest of the year. In our survey, the gap between the best-case and worst-case real GDP growth in December was 12.7 percentage points, which remained basically unchanged from the estimated uncertainty in early July. Even if our survey forecast for the unemployment rate in December is lowered, economists’ outlook for real GDP growth in the fourth quarter, a broader indicator of overall recovery, has hardly changed in the past two weeks. The group now believes that by the end of the year, the annual growth rate of real GDP will reach 6.3% (chain growth), which is only slightly higher than 5.8%. August 24.

Since we started asking questions on June 8, the ratio is higher than any of the median forecasts in our survey, but economists still believe that the probability of a negative real GDP growth in the fourth quarter is at least 10%, and their best-case scenario The forecast is that the current one-month growth rate will remain between 12% and 13%.

Another sign of continued pessimism among economists: They believe that August spending and savings figures will not be so optimistic. Despite the fact that more Americans returned to work in August, economists collectively believe that there is a reason. 31% probability Actual personal consumption expenditure Compared with July, the figure in August is much lower. Personal savings rate Compared with July, August dropped sharply.Some economists seem to link their forecasts of these two indicators to the expiration of the $600 weekly payment for unemployed workers, which makes sense because the payment Seems to allow many people The unemployed will spend more than usual and even save some money.

A slowdown in consumer spending or a decline in the savings rate may be a harbinger of future household austerity policies. This is not good news for the economy, because if customer demand increases, it may be difficult for companies to bring back more workers and suddenly start spending less money.

All of this means that for the economy, now is a critical moment, but it is confusing. Things are certainly not as bad as the economists in our survey thought. But this is all a matter of perspective. after all, Lost more than half of the job Still did not come back in March and April. Since millions of people are still unemployed and there is great uncertainty about how the virus works, it is easy to understand why economists have not celebrated.

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