Chief executives expect the state and U.S. economies to stabilize or perform better in the months ahead and continue to rebound from sharp pandemic-related declines in the spring.
More than eight in 10 of the Business Leaders for Michigan members surveyed recently say they expect the U.S. economy to either stay the same or improve in the next six to 12 months. Nearly 80 percent expect the same for Michigan’s economy.
That’s a reversal from the last Business Leaders for Michigan outlook survey in July when more than half of respondents expected the state and nation to worsen economically. Despite the improved outlook now, uncertainty remains in how the pandemic progresses and whether the rising number of COVID-19 cases continue through the fall and into the winter.
“Michigan’s largest employers collectively agree: the one factor that will determine whether our economy rounds the bend into safer territory is virus prevention,” Business Leaders for Michigan President and CEO Doug Rothwell said. “There appears to be growing confidence that we’re moving forward, with most employers and employees embracing the new normal and mitigating risk. What matters most now are efforts to prevent a full-on second wave of COVID-19, as well as a shared focus on the strengths that make Michigan an economic competitor over the long term.”
The survey also showed 22 percent of Michigan employers expect to grow jobs at their companies, and 26 percent plan to make higher capital investments.
Nationally, U.S. Real GDP bounced back at an annual rate of 33.1 percent for the third quarter after a historic second-quarter decline of 31.4 percent, according to the U.S. Bureau of Economic Analysis.
PNC Bank’s latest economic outlook for the U.S. predicts Real GDP of 4.8 percent for the third quarter and a negative 3.7 percent for all of 2020. PNC predicts Real GDP to start 2021 at 3.7 percent in the first quarter, followed by 3.4 percent in the second quarter and 3.1 percent in the third.
“The economic recovery from the Viral Recession continues, but the path ahead remains highly uncertain. The strength of the recovery will depend on the progression of the pandemic and whether Congress appropriates more fiscal stimulus,” PNC economists wrote in a recent October outlook. “But it will also depend on how well small and mid-sized businesses weather the ongoing economic turmoil. These businesses have fewer resources than their larger counterparts, including smaller reserves and less access to credit. If the pandemic and soft economy force many small and mid-sized businesses to close, the recovery would be weaker and the improvement in the job market slower.”
The outlook projects U.S. unemployment to continue a decline and register 7.0 percent in the fourth quarter, from an estimated 8.8 percent in the third. Unemployment will ease further to 6.8 percent in the first quarter of 2021 and 6.5 percent in the second, with a full-year rate next year of 6.4 percent, according to PNC.