Odds of another recession this year 'pretty high' if Congress doesn't pass more aid: Zandi
The U.S. economy officially entered a recession in February, the NBER said
The U.S. could slide into a second coronavirus-induced recession this year if the federal government does not pass additional economic relief measures, according to Moody's chief economist Mark Zandi.
"Policymakers have done a good job, I think to date, but they've got more work to do," Zandi said Tuesday during an interview with FOX Business' Maria Bartiromo. "I don't think they can sit back and say, 'Oh, the recovery is now underway and we don't have to do anything more.' If they don't, the odds of going back into a recession this year are pretty high."
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So far, Congress has passed three massive stimulus packages totaling nearly $3 trillion to blunt the economic pain from the virus outbreak. Both parties have indicated they're open to additional aid -- House Democrats passed a $3 trillion aid bill in May, though Senate Republicans declared it dead on arrival -- but remain divided about specific measures should be included.
Some options currently under consideration at the White House include a payroll tax cut, liability protections for businesses reopening during the outbreak, tax deductions or write-offs for individuals who take a vacation during a defined period of time, and a back-to-work bonus for unemployed Americans returning to their jobs.
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"The aggressiveness here was astounding, unprecedented and I think certainly cushioned the blow. I will say though, that we need more," Zandi said.
NEW YORK, June 8, 2020 -- A worker cleans the window of Macy's online order pickup office in Manhattan June 8, 2020. ( Photo by Wang Ying/Xinhua via Getty) (Xinhua/Wang Ying via Getty Images)
He cautioned that the economy won't fully bounce back from the crisis until the virus fully recedes; so long as there's the threat of a second wave of COVID-19 infections, businesses won't hire or expand and consumers will remain cautious. Even as businesses reopen, he said, unemployment will likely remain in the double-digits.
"That's a lot of households that are going to be under a lot of financial pressure," he said. "If they don't get some additional support, they're going to pull back and the economy could go back into recession."
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The National Bureau of Economic Research, the agency that identifies periods of economic growth and contraction, said Monday the U.S. entered a recession in February, officially bringing to end a record-long expansion.
June will likely mark the first month of recovery from the virus outbreak and subsequent shutdown of a broad swath of American life, according to Zandi.
"It'll be a three-month recession, shortest recession in history," he said. "But it also will be the most severe."