WASHINGTON – The United States economy will likely experience a significant slowdown, or even a contraction, in the first quarter (Q1) of the year, said a senior Federal Reserve official yesterday, reported the Xinhua news agency.
“On the national level, for now, I’m expecting Q4 of last year to show modest growth, before a significant slowing in Q1 this year, or possibly even negative growth,” Philadelphia Federal Reserve Bank president Patrick Harker told a virtual event held by the Philadelphia Business Journal.
“The good news is that the weakness should stay relatively short-lived, as we all hope Covid-19 vaccinations become more widely available.”
However, he said, the pace of vaccinations in the US “has been incredibly disappointing so far”.
“Fewer than five million people have received their first dose of the vaccine, less than 2% of our total population.”
He said the US$900 billion (RM3.6 trillion) relief package recently passed by Congress should help buoy the US economy, which could “begin to look much more normal” in the second half of 2021.
“GDP growth should be strong in the second half of the year, and through 2022, before a light tapering in 2023.”
Harker made the remarks as US economic recovery loses momentum due to a surge in Covid-19 cases across the country in recent months.
“While the number of infections and deaths fell during the warmer months, cases have been on the rise since September. And deaths, a lagging indicator, are tragically now even more voluminous than they were during the first wave of Covid-19 last spring.”
Deaths in the US from the coronavirus surpassed 364,000 as of yesterday afternoon, with the national caseload topping 21.4 million. – Bernama, January 8, 2021
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