US economy to shrink in 1st quarter of 2021 amid virus resurgence: JPM - Business Insider

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The US economy will shrink in the 1st quarter of 2021 as winter weather spurs virus resurgence, JPMorgan says

A shot will be available for health care providers, essential workers, and vulnerable populations by the second quarter, JPMorgan said. Broader distribution will come soon after and further lift the economy, the economists added.

The team expects second-quarter growth to reach 2.5% while third-quarter GDP will grow 6.5%. The pace of recovery will cool in the fourth quarter to 3.8% growth.MORGAN STANLEY: Buy these 5 cheap UK stocks that are poised to gain from a bounce back in the British economy in 2021 "Uncertainties abound, but if this timeline is broadly correct, a normalization of activity should give meaningful support to growth in mid-2021," the economists wrote.

Risks throughout next year skew to the upside and downside. Better-than-expected trials could see a vaccine distributed ahead of schedule and drive stronger second-quarter growth, according to the bank. On the other hand, approval processes could take longer than expected and delay a rollout. Fiscal policy will also play a critical role in nursing the economy back to pre-pandemic health. JPMorgan expects Congress to pass another $1 trillion stimulus package near the end of the first quarter. The bank's mid-year forecasts hinge on such fiscal support. Democratic wins in both of Georgia's upcoming Senate run-off elections would open the door to a much larger package, but continued gridlock between parties jeopardizes the chances of any bill reaching the president.

 

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