Wall Street investment bank Goldman Sachs has predicted that although US Gross Domestic Product (GDP) is on course to shrink more than anticipated, the American economy will be firmly back on track by September.
But a third-quarter rebound will be limited by the likely "pause" in consumer spending in July and August, according to Goldman Sachs analysts cited by Wall Street Journal reporter Michael S. Derby.
Goldman Sachs on shifting coronavirus landscape in US: “We do not believe that the consumer comeback has reached its limits, and we expect the US economy to get back on track in September.” pic.twitter.com/OFvrDVmEQQ— Michael S. Derby (@michaelsderby) July 5, 2020
Nevertheless, the investment bank upgraded its forecast numbers for 2021 in part over heightened optimism over recently improved "prospects for an earlier vaccine," says Derby.
Analysts "expect the US economy to get back on track in September," said the expert.
On unemployment in the US, the bank has revised its earlier estimate of 9.5 percent, forecasting the figure to remain at 9 percent until the end of 2020, reports Bloomberg.
The renewed estimates come after US President Donald Trump hailed the fact that the country had rebounded to almost pre-pandemic levels "from the standpoint of the stock market."
Speaking at a “Spirit Of America” showcase event at the White House on 2 July Trump emphasized a record surge in retail sales and a 50-day stock market rally in June.
Not only are 80 percent of small businesses reopening, but NEW business applications have doubled! pic.twitter.com/mLtgxtM1pU— The White House (@WhiteHouse) July 2, 2020
June was also cited by Trump for its largest monthly jobs gain in history.
“The United States economy added almost 5 million new jobs in the month of June. That’s shattering all expectations and shattering all records — historic records. History of our country, we’ve never added anywhere near that,” said Trump.
Greatest Top Five Monthly Jobs Gains in HISTORY. We are #1! pic.twitter.com/Cs8NEFbHG0— Donald J. Trump (@realDonaldTrump) June 5, 2020
Amid the pandemic challenges, the president said manufacturing was being brought back because of “incredible trade deals”.
"In a pandemic, we're almost even where we were before the pandemic started, and nobody would have said that was possible," he added.
Trump also praised recent progress regarding three coronavirus vaccine candidates.
“Three vaccine candidates are now on trial, with three more to start very shortly. These are all great companies, they’ve had tremendous success with other problems in the past. We’re accelerating production through Operation Warp Speed,” said Trump.
The president concluded by guaranteeing that by next year, the nation would come back economically stronger “because of what we’re doing now”.
The statements came as the US Labour Department's latest report showed a 4.8 million increase in jobs for the American economy over the course of June, along with a fall in unemployment from around 13 percent to 11.1 percent.
The optimistic statements by the US President came despite a surge in coronavirus infections in a number of states.
America recorded its biggest single-day spike in new COVID-19 cases on 1 July, with more than 50,000 people testing positive for the first time, according to a tally by Johns Hopkins University.