A prominent economist at UC Riverside released a forecast predicting the stay-at-home orders will enable the U.S. economy to “come roaring back in the third quarter” with only minimal long-term damage.
“If the extraordinary health mandates that have been put into place do indeed control the spread of the virus over the next four to six weeks — and we are seeing that happen in other countries and in parts of the United States — then we expect things to come roaring back in the third quarter with only mild long-term damage,” said Christopher Thornberg, director of the UC Riverside business school’s Center for Economic Forecasting.
Thornberg’s forecast shows no growth in the first quarter, a 25% drop in the second, a 20% surge in the third quarter, and 5% growth in the fourth quarter.
The forecast, released on Monday, assumes significant economic activity resumes by the end of May.
“Part of our optimism centers around the fact that this unprecedented crisis is not hitting a fragile economy, but a sturdy one that was fundamentally sound when the problem started,” he said.
Thornberg said the lockdown measures are not worse that the disease because they will help prevent a second outbreak that would do worse damage to the economy.
He said the federal government’s response has been extremely aggressive and will help stabilize U.S. household and business finances in the short term. But the long-term effect of the resulting government borrowing could be a “massive fiscal emergency.”