A Slow Recovery of US and European Economies after Pandemic

In its most recent Q3 economic scenarios, Strategy Analytics predicts US and Western European economies will recover slowly. They will be between -4% and -6.6% below the levels for Real GDP at the end of Q4 2019 by the end of 2021.

“The recession is technically over and after the historical declines from the Q2 lockdowns, there is definitely a bounce upward in June and July. The bounce is expected to be short-lived and continued recovery in Q4 and Q1 2021 may be weak,“ said Harvey Cohen, President of Strategy Analytics.

“We do see some bright spots in smartphones, Smart Home, and even in automotive technologies. The overall economic picture is weak. COVID was responsible for the dramatic downturn, COVID continues to exert a detrimental drag on global economies, and there will be no return to normal economic conditions until this COVID drag is eliminated,“ added Cohen.

Scenarios for COVID improvement begin with the availability of an effective vaccine which, optimistically, is expected by year-end 2020. Hesitancy among the US population to be early adopters of a vaccine accelerated into production may lengthen the period for significant immunization until mid-2021. By that point, the protracted period of high unemployment, weakened consumer balance sheets, and weakened sectors in the US economy will make strong growth difficult.

“We believe we are in a ‘Deep-W’ or ‘Wide-V’ recession where the extraordinary decline of 10% in real GDP in Q2 produces significant damage aggravated by continuing COVID waves that makes for a slow recovery in our scenarios with Real GDP down between -6.6% and -9.2% for the US in 2020,“ concluded Cohen.