NEW YORK (ICIS)–US economists featured by the National Association for Business Economics (NABE) see the US economy opening up largely by mid-year but with an uneven recovery through 2020.

“My belief is that the severe contraction continues not only in the second quarter but in the third quarter, with a gradual upturn in the fourth quarter,” said Jack Kleinhenz, chief economist of the National Retail Federation.

“I see more of a rolling recovery, like a rolling recession. It will take opening of different parts of the economy at a different pace and different time,” he added.

Kleinhenz and other economists spoke on the 13 April US Macroeconomic Update and Outlook Webinar hosted by the NABE.

On 29 March, the US extended its nationwide social distancing guidelines through the end of April. Non-essential workplaces remain closed.

“In terms of when the economy can reopen, as economists we should pay more attention to the epidemiologists because it will be difficult to reopen broadly unless we have testing, perhaps antibody testing to understand where the virus is under control and where it isn’t,” said Sara Rutledge, managing director at StratoDem Analytics.

“The most likely scenario is that it will take 12-18 months before we have something akin to a vaccine that would allow a return to normalcy… In general, I think we could see some movement to that direction in the second half of the year,” she added.

While the US economy may reopen, it will largely be an uneven recovery, with regional and end market variances.

“I think the economy will be allowed to reopen after Memorial Day (25 May). That does not mean all things are going to reopen. I think large parts of the economy are going to remain shut down simply because of lack of demand,” said Robert Fry, chief economist of Robert Fry Economics LLC.

“People are not going to go on cruises, they’re not going to fly unless it’s absolutely necessary. I think a lot of people are still going to hesitate about going out to restaurants and especially movie theaters and other theaters,” the former DuPont economist added.

Chris Varvares, co-head of US economics at IHS Markit, also sees a post-Memorial Day reopening as reasonable, but noted concerns about consumer behaviour.

“It’s not clear what will happen with consumers – that’s totally an unknown at this point. Remember after 9/11 it took two years for air passenger miles to get back to the prior peak… Every flight could have the coronavirus on it so that’s likely to keep air travel pretty suppressed for quite some time,” said Varvares.

In the NABE’s April 2020 Flash Outlook Survey, economists see US GDP of -26.5% in the second quarter, followed by a 2.0% gain in the third quarter and a 5.8% increase in the fourth quarter.

Focus article by Joseph Chang

International Commodity Intelligence Services