A veteran strategist said that a V-shaped recovery for the U.S. economy is possible despite a lack of stimulus aid.
Many economists believe that another round of fiscal aid would help prompt the U.S. economy’s rally. In fact, it has been an ongoing debate of whether to pass another fiscal aid or not both Democrats and Republicans are tackling since the first release of the stimulus package.
But Ed Yardeni, a veteran strategist and the president of Yardeni Research, argued that further stimulus package is not needed.
US economy to recover on its own
In an interview with CNBC’s Street Signs Asia on Wednesday, September 30, the veteran strategist said that he is not sure whether another round of fiscal aid is needed. But he claimed that the U.S. economy “can continue to grow with the kind of fiscal stimulus which is still in the system from the first round.”
Yardeni further explained that Americans have saved a massive amount of money throughout March and April when city lockdowns and strict stay-at-home protocols were in place. And that those who received unemployment benefits “could not spend all of it.”
“People saved a tremendous amount of money during March and April because they could not spend it,” he explained.
Yardeni also mentioned the quick recovery of the housing sector, which he thinks had offset many of the troubles brought upon by the pandemic.
“The data has been consistent with a V-shaped recovery so far. We had an unprecedented 2-month lockdown in March and April and then we have had a recovery ever since then. The latest data through September show a solid recovery,” the veteran strategist continued.
Experts predict a weaker economy
Yet on the flip side, many economists see signs that point to the U.S. economy becoming weaker.
Analysts from Morgan Stanley, for example, have downgraded their original U.S. economic growth forecast to 3.5%, coming from a previous expectation of 9.3%. The bank explained that the decline was massively due to the “diminishing fiscal aid.”
Other major banks like JPMorgan has downgraded its prediction from 3.5% to 2.5% too, citing the same reason Morgan Stanley gave. The Bank of America, on the other hand, dropped its expectations to 3%.
In a separate report, business closure across the country has steadily increased since the onset of the pandemic.
A data from Yelp titled Economic Impact Report claims that an estimated 163, 735 businesses have shut down as of August 31. An alarming 97, 966 businesses, or nearly 60% have permanently stopped their operations too.