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WSJ Survey: Economic Recovery Seen Staying on Track After Election

By Harriet Torry and Anthony DeBarros 

Forecasters expect the U.S. economic recovery to remain on track following the presidential election, with a potential coronavirus vaccine and a new fiscal stimulus package in sight, a new Wall Street Journal survey shows.

The survey also shows that the amount of stimulus the economy needs to recover from the coronavirus shock is more modest than many lawmakers have suggested after the economy outperformed expectations in the third quarter. The survey of 65 business and academic forecasters was conducted Nov. 6-10.

Forecasters see an unemployment rate of 6.8% at the end of this year, down from 7.8% in last month's survey. They now expect gross domestic product to contract 2.7% this year, measured from the fourth quarter of 2019, an improvement from the 3.6% contraction they predicted last month. They forecast expansions of 3.6% in 2021 and 2.9% in 2022, only slightly slower than in the prior month's survey.

Most economists say some further fiscal aid remains likely, with some saying the prospect of renewed lockdowns as coronavirus infections rise across the country could spur lawmakers to strike a deal.

"Economic damage from a second wave is raising pressure for stimulus," said Lynn Reaser, chief economist at Point Loma Nazarene University. "Many unemployed and small businesses are struggling to survive."

Senate Majority Leader Mitch McConnell said Tuesday that lawmakers remain far apart on how large another package should be, as Democrats seek a bill topping $2 trillion and Republicans favor a $650 billion proposal.

Forecasters in this month's survey assigned a 61% probability of a fresh round of stimulus in the first quarter of 2021 and a 24% likelihood that it will come later that year. They put a 38% probability on a package in the current fourth quarter and a 17% probability that there would be no further stimulus at all.

When asked how much near-term support the economy needs, the majority of economists in November's survey, 58%, said a stimulus package should be in the $1 trillion to $2 trillion range. Some 29% said it should be less than $1 trillion, while 13% said an appropriate aid package should be in the $2.1 trillion to $3 trillion range.

The Associated Press called the presidential race on Nov. 7 for Democrat Joe Biden, although President Trump has so far been unwilling to concede defeat.

Mr. Biden is likely to enter office as the first president since George H.W. Bush without a majority in the Senate at the start of his first term. Democrats would need to prevail in two runoff elections in Georgia in early January to create a 50-50 tie that would be broken by Kamala Harris as vice president.

For economists, that puts in doubt Mr. Biden's plan to raise the top individual income-tax rate for individuals with incomes above $400,000 and increase the corporate tax rate to 28% from 21%.

More than half of economists, 55%, said tax increases would be unlikely under a Biden presidency with a Republican-controlled Senate. Only a third of economists saw higher taxes as likely.

Nearly 90% expect uncertainty to decrease for financial markets thanks to clarity about the election outcome and news of a potential coronavirus vaccine. Over 80% of respondents expect uncertainty to decrease for the economy in coming months.

"There's a lot less uncertainty now than just a week ago," said Leo Feler, a senior economist at the Anderson School of Management at the University of California, Los Angeles. "The election went smoothly. Even President Trump's refusal to concede was expected. There's a promising vaccine candidate."

On Monday, Pfizer Inc. and its partner BioNTech SE said their Covid-19 vaccine proved more than 90% effective in protecting people from the virus in a study, raising hopes that it could -- pending regulatory authorization -- become the first of several vaccines that could stem the tide of the disease. A number of economists in the survey said the news was highly positive for their economic outlook.

"A vaccine will unlock close to $4 trillion in impaired economic activity, which does denote significant upside risk to the forecast," said Joe Brusuelas, chief economist at RSM US.

Others were more circumspect. "While the latest vaccine news is positive, in the near term, the virus will continue to hamper economic activity, especially within high-contact services industries," said Deutsche Bank economists Matthew Luzzetti and Brett Ryan in their survey responses.

Write to Harriet Torry at and Anthony DeBarros at


Corrections and Amplifications

This article was corrected on Sept. 13, 2021 because it gave an incorrect figure. Economists forecast an unemployment rate of 6.8% at the end of 2020, not 6.7%.

(END) Dow Jones Newswires

November 12, 2020 10:14 ET (15:14 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.

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