Are predictions about economic reclamation going wrong?
At the beginning of 2020, US economists and market experts were predicting a worse financial downtime of the US economy. They were saying that it will take years to recover from it and comparing it with the great depression of the last century. But their all estimations have gone wrong as the economy is trying to stabilize. It has now become logical that the country is not going to face worse time. Now the country has recovered from the pandemic to some extent, experts are now revising their projections.
The wall street journal in its report has written that the United States economy and market are coming out from the pandemic very fast than projections. The business and academic poll conducted by the Wall Street Journal predicted a 23% annual rise in GDP in the third quarter. This is significantly more than the expectation of an 18.3% growth rate in the last survey.
How economic recovery will take place?
Experts explained economic recovery in four alphabets i.e. V, U, W, or L.
V-Shaped recovery
V-shaped recovery explains the speed of recovery of an economy. This speedy recovery of the economy is considered the best-case scenario of recovery. The economy recovers itself in several months.
U-Shaped recovery
The U-shape recovery scenario is slower than the V-shape recovery scenario. The economy remains under recession for a longer time. The economy going under U-shape recovery takes several years for recovery.
W-shaped recovery
In the W-shaped scenario of economic recovery, The economy recovers partially then crashes. After it, the economy recovers itself quickly.
L-shaped recovery
It is the worst-case scenario of an economy. This economy takes a long time for a full recovery. The economy tries to recover but then again goes into recession before its final recovery.
Many experts were comparing this recession with the recession of 2008 that collapsed the housing market. Experts were predicting that the economy will follow the L-shape recovery pattern but fortunately, it did not happen.
In a survey conducted by the Wall Street Journal, a large number of(almost 83%) of the economist predicted that economic recovery will follow the Nike swoosh or V-shaped economic recovery pattern.
What about the unemployment rate?
It is quite hard to speak confidently about the reports that show millions of people do not have any job. But things are quite better when we compare it to many forecasts. It was predicted that the unemployment number will exceed 20% that was faced by The USA during the great depression.
In contrast to the first report of 2020 that showed a 14.7% unemployment rate, it is now 8.4%. This was a big surprise for the analyst
Economist Jason Furman stated that
“An unemployment rate of 8.4% is much lower than most anyone would have thought it a few months ago. It is still a bad recession but not a historically unprecedented event or one we need to go back to the Great Depression for comparison”
A survey conducted by the Wall Street Journal forecasted unemployment rate that is 6.3% for 2021, 5.2% for 2022, and 4.9% for the year of 2023.
During the great depression, the unemployment rate was more than 9% for 108 months. It happened for 30 months during the great recession. During the oil recession of the 1980s, it remained for 19 months. But in 2020 it only lasted for 4 months.
We are performing well in the economy but still, it takes a longer time for the recovery.