Economic Forecast: US recovery could take until the end of 2021 – job losses and disinflation the medium term outlook for Europe

18th May 2020 (Last Updated May 18th, 2020 10:57)

18 May

US Federal Reserve: Jay Powell warns US recovery could take until end of 2021 saying the Fed and Congress might still have to do more to support the economy, according to an exclusive interview with CBS.

Writing about Europe’s labour market HSBC Senior European Economist Chris Hare said that the medium-term outlook is for job losses and disinflation.

“But for the longer-term, weak labour supply and a shift away from low-cost employment risks weaker economic growth, squeezed company profits and higher inflation.

“A large portion of recent Eurozone and UK GDP growth came from employment expansion. If migration and labour participation gains now stagnate, long-term employment growth could be very weak.

“But profits cannot be squeezed forever: recovery may eventually give firms more power to raise prices more quickly this time.”

In a May 17 note, Goldman Sachs economists Prachi Mishra and Andrew Tilton Goldman estimated that India will have its deepest recession ever as they forecast the GDP to contract 45% in Q2 this year. However, the bank also predicts a 20% uplift in Q3.