WASHINGTON—The so-called checkmark-shaped economic recovery from the coronavirus pandemic is going to take even longer than many had hoped, according to a new CUNA Economic Update.
“The economic recovery started as states opened up in late May and early June, but the latest surge of COVID-19 has led to around 70.0% of those states reversing re-opening,” observed CUNA VP of Diversity, Equity and Inclusion Samira Salem. “This is certainly slowing economic activity and increasing the likelihood of a protracted recession.”
Salem said she expects economic growth to remain muted in the fall and winter months as “we adjust to this new normal of mask wearing, and social distancing and get more testing and tracing in place.”
Overall, CUNA economists project a 5.3% decline in relative GDP in 2020, followed by a growth of 4.0% in 2021 and a decreasing trend in U.S. unemployment from around 10.0% by the end of 2020 to 8.0% by the end of 2021.
“To put this into perspective, the highest unemployment rate during the Great Recession registered 10.0%,” Salem reminded.
Salem noted unemployment is highest in Black and Latinx populations, which are more likely to work in low-wage jobs taking the biggest hit during pandemic.
Feeling the ‘Brunt’
“The brunt of the burden is falling on those least able to bear it,” she said, adding that women are also disproportionally impacted due to things like childcare concerns. “Recovering from job loss tends is expected to take longer for these groups as they spend more time looking for jobs and generally find jobs that pay less than the ones they’ve left.”
In mid-July the 30-year mortgage rate hit 2.98%, the lowest recorded rate. As CUToday.info reported earlier, CUNA Mutual’s most recent Trends Report shows mortgage lending was the only loan category to record growth during the first five months of 2020.
“The housing market seems to be coming along, this is obviously helped by historically low interest rates,” Salem said. “Despite the fact there’s tight inventory and relatively high home prices, the lower mortgage rates have particularly helped boost mortgages and refinances.”