/Economy to Shrink as Covid Spikes New Lockdowns

Economy to Shrink as Covid Spikes New Lockdowns

JPMorgan Chase & Co. predicts the U.S. economy to shrink in the first quarter due to recent spikes in Coronavirus cases across the country. Governors are implementing second rounds of lockdowns and harsh restrictions in an effort to slow the spread of the virus. California Governor Gavin Newsome implemented a curfew in most California counties and Michigan Gov. Gretchen Whitmer is attempting the number of people gathered in a private home.

The new measures will cause the U.S. economy to shrink by 1% in the three months through March after growing 2.8% during the final quarter of 2020, Feroli said, noting that a vaccine will “limit the damage.”

Pfizer Inc. and BioNTech, Moderna Inc. and AstraZeneca plc announced that late-stage trial data showed that their respective COVID-19 vaccines were effective and the companies hope to receive emergency use authorization before the end of the year.

The JPMorgan team sees Congress passing $1 trillion of stimulus by the end of the first quarter, giving a further boost to growth in 2021 after an expected “year-end twist” from the Fed before the central bank steps aside and to see if its policies boost inflation.

The firm forecasts the U.S. economy will grow at a seasonally adjusted annualized quarter-over-quarter rate of 4.5%, 6.5% and 3.8% in the final three quarters of next year.

Moderna and Pfizer have both released promising reports that the vaccines have been over 90% effective in phase three trial subjects.

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