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The U.S. continues to be in a recession that began in February, according to members of the National Association for Business Economics (NABE) in its semi-annual Economic Policy Survey. From July 3 – August 10, the NABE surveyed 235 of its members on the status of the recession, the government's fiscal response to COVID-19, the most important policy issues facing the next administration, and more.
Recession and recovery
The survey found that "nearly two-thirds [66%] of the … members who participated in the August 2020 … Survey believe the U.S. economy continues to be in a recession that began last February," said NABE President Constance Hunter, CBE, chief economist, KPMG. In addition, "80% of panelists indicate there is at least a one-in-four chance of a 'double-dip' recession," according to Hunter.
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Hunter also reported that "the panel is split in its view on Congress's fiscal response to the recession, with 40% calling the response insufficient, 37% indicating the response is adequate, and 11% saying it is excessive."
Survey Chair Gregory Daco, chief U.S. economist, Oxford Economics, added that almost 75% of respondents "believe that the current stance of U.S. monetary policy is appropriate, the largest share holding this view since 2007."
Almost equal number of respondents expect the recession to end in the second half of 2020 (35%) or in 2021 (34%). Fifteen percent said that the recession ended in Q2 of this year.
When asked about the primary objective of fiscal policy, the results were split: 38% said it should be to stimulate growth quickly; 28% said to stimulate growth in the medium-long term (a drop of 44% from responses in the February 2020 survey, according to the NABE).
Responses were also split across the board when members were asked about the size of the next stimulus package. A combined 59% selected $2 trillion or lower, with 52% selecting at least $1.5 trillion. Additionally, the majority (60%) said that both the supplemental unemployment benefits and the Paycheck Protection Program (PPP) should continue.
Economic policy and the election
When asked about the current U.S. fiscal policy, results were fairly split: 45% of respondents found fiscal policy is "too restrictive"; 37% find it "about right"; and 17% found it "too stimulative" (a drastic drop from the 52% who picked this response in the February 2020 survey, according to the NABE).
Inflation-adjusted gross domestic product (GDP) will get back to its pre-pandemic level in Q2 2022 or later, according to 49% of respondents, with 34% saying it will regain those levels in 2021. (Only one respondent said the GDP would recover in 2020, the NABE said.)
Payroll may recover slower, as 74% of NABE members who responded said payrolls will return to pre-February levels in 2022 or 2023.
The upcoming presidential election will have a huge impact on fiscal policy going forward. The majority of respondents (62%) believe that Joe Biden would be better at promoting economic growth, compared with 25% for President Trump.
When asked to select the top three most important issues for the next administration they listed the following more frequently than the other choices:
- fighting COVID-19: 54%
- working toward economic recovery: 47%
- focusing on health policy: 37%
Other issues gaining more than 20% of the responses were climate change (23%), immigration (22%), and income inequality (21%).
Individual tax reform (6%), police reform (4%) and infrastructure investment (0%) were the lowest priority issues for the NABE members who responded to the survey. The full report and responses can be found at www.nabe.com.
Steve Salkin is a Managing Editor for ALM. He can be reached at [email protected].
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Steve Salkin
Steve Salkin, Esq. is the Editor-in-Chief of ALM's Law Journal Newsletters. He can be reached at [email protected].
