University of Michigan economists Gabriel Ehrlich and Daniil Manaenkov give the twice-yearly Consensus Revenue Estimating Conference. The experts from U-M’s Research Seminar in Quantitative Economics are providing a state and national economic outlook.
They say consumer sentiment has perked up slightly, after many households received economic stimulus checks.
The conference comes amid a steep economic downturn spurred by policies designed to contain the spread of COVID-19. Here are some of the economists’ forecasted findings:
The sharp, severe contraction during the current second quarter should be followed by a gradual recovery. The real gross domestic product is expected to fall at a 30% annual rate (8.5% on a nonannualized basis) during the current quarter but slowly improve and return to its pre-COVID level by mid-2022. Annual real GDP contracts by 4% in 2020, and then grows by about 3% in 2021 and 2% in 2022.
Total U.S. nonfarm payrolls lost an unprecedented 20.5 million jobs in April. The unemployment rate surged to 14.7% and it would have been 4.8 percentage points higher if all workers on temporary layoffs were correctly captured by the survey. The reported unemployment rate is expected to peak at 17.4% during the current quarter and improve to 8.9% by year’s end and 7.6% at the end of 2021.
Payroll employment in Michigan is expected to plummet by roughly 1 million jobs, or 23.5%, during the current quarter. Economists expect about 460,000 of those jobs to return in the third quarter, with another 190,000 returning in the fourth quarter. The state is forecast to recover roughly 62% of the jobs lost this quarter by the year’s end. By the end of 2022, economists expect Michigan to recover about nine out of 10 of the jobs lost this quarter.
Michigan’s unemployment rate is expected to average about 22% during the current quarter The state’s jobless rate is forecast to fall to 11.3% by the end of this year and to 8.1% by the end of 2021.