The researchers led by Jan Hatzius now predict the world’s largest economy will expand 3% on a quarterly annualized basis, down from the 6% they previously anticipated.
“It is now clear that Congress will not attach additional fiscal stimulus to the continuing resolution,” they said in a report. “This implies that after a final round of extra unemployment benefits that is currently being disbursed, any further fiscal support will likely have to wait until 2021.
“The withdrawal of stimulus will reduce disposable income to the pre-pandemic level, weighing on consumer spending, they said.Slower growth will leave “more room for catch-up later.”
This means they now see the economy growing 5.8% in 2021 after a 3.5% contraction this year.
© Copyright 2020 Bloomberg News. All rights reserved.