The US economy may be headed for a double dip recession if Congress does not get a stimulus bill signed, according to S&P Global economic forecast released Wednesday (December 2).
The financial analytics firm also said the economic fallout from the pandemic could take a year longer to recover from without the stimulus.
“Since June, S&P Global Economics has said that it is not a far-fetched possibility that we could get a scenario of no more fiscal stimulus and a COVID-19 resurgence that cripples growth in the fourth quarter,” S&P Chief Economist Beth Ann Bovino wrote in the report.
“Unfortunately, this downside scenario seems more likely,” she added.
No stimulus package paired with record-breaking spikes in coronavirus cases would mean the US economy “will decline for two consecutive quarters,” and a full recovery not possible until the end of 2022.
This scenario, Bovino continued, would increase the risk of “long-term scarring” in the nation’s economy.
“On its own, a one quarter decline does not signal recession. But it increases chances that the US will see another downturn in the near future,” she wrote.
A recession is defined by two consecutive quarters of economic decline. The forecast predicts that the US economy will decline at a rate of 2.3 percent in the last months of 2020, making the total decline to 3.9% for the year, as reported by The Hill.
S&P said that a $1 trillion relief package is needed or else things could get worse for the economy and Americans.
As unemployment continues to rise along with new virus cases, and pandemic protections like eviction moratoriums come to an end, the stalled negotiations between Republicans and Democrats make a stimulus package before the end of the year unlikely.
The Hill reported, however, that a bipartisan group of lawmakers submitted a $908 million relief bill to hopefully be a compromise between Mitch McConnell’s $500 billion bill, and Nancy Pelosi’s $2.2 trillion package.
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