Our nation’s top forecasters predict that we are nearing an inflection point in the economic recovery from the COVID-19 pandemic. Our polarized politics, coupled with a presidential election year and an evolving virus, are likely to understate the complexity, uncertainty, and continued adaptation that the recovery will involve.
Republicans are likely to emphasize the good—citing historic rates of improvement—and Democrats are likely to emphasize the bad—citing historic levels of damage—as if our giant and interwoven economy and her impending recovery can be understood in a binary way that fails to account for the full picture.
Consider that the second quarter of this year is expected to be one of the worst on record. The Congressional Budget Office expects economic growth to decline by nearly 12 percent in the second quarter, equivalent to an annual decline of 40 percent. Topline economic numbers are unable to capture the tremendous anxiety and loss that the last three months have produced.
But then, a shift. The same CBO report predicts real GDP to grow by 5.4 percent in the third quarter, or an annual rate of 23.5 percent, with $1 trillion added back into the economy in a matter of months (understanding the considerable uncertainty surrounding any projections and risk of virus resurgence). This too would be a record-setting quarter in the opposite direction, although the gains are unlikely to make up for the losses for years to come.