WASHINGTON – The US economy will likely experience a significant slowdown or even a contraction in the first quarter of 2021, a senior Federal Reserve official said on January 8, Xinhua news agency reported.
“On the national level, for now, I’m expecting the fourth quarter of last year to show modest growth, before a significant slowing in the first quarter of this year – possibly even negative growth,” Philadelphia Federal Reserve Bank President Patrick Harker said at 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,” he said.
But the pace of vaccinations in the United States “has been incredibly disappointing so far”, Harker noted.
“Fewer than five million people have received their first dose of the vaccine – less than 2% of our total population,” he said.
Harker also said the recently passed US$900-billion relief package from Congress should help buoy the US economy, which could “begin to look much more normal” in the second half of 2021.
“GDP (gross domestic product) growth should be strong in the second half of the year, and through 2022, before a light tapering in 2023,” he said.
Harker made the remarks as US economic recovery is losing momentum due to a surge of new 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,” he said.
US COVID-19 deaths surpassed 364,000 as of Thursday (January 7) afternoon, with the national caseload topping 21.4 million, according to the Center for Systems Science and Engineering at Johns Hopkins University.