The country’s labor market will not reach pre-pandemic levels until 2024, according to S&P Global.
“The big challenge for the next president, whoever that may be, will be jobs,” said S&P Global U.S. Chief Economist Beth Ann Bovino.
While the overall size of the economy, which is measured as economic output or activity, is expected to hit precrisis levels by the fourth quarter of next year, it will take three more years for the labor market to heal.
The official unemployment rate has dropped from a peak of 14.7 percent in April to 7.9 percent in September, an unexpectedly quick recovery, but still miles away from the 3.5 percent low before the crisis.
Bovino said that the current figure masks weaknesses in the labor market, and that the “real” rate is probably closer to 11 percent.
And the recovery could be in jeopardy without further economic stimulus.
The S&P Global forecasts assumed that Congress would approve an additional $500 billion in COVID-19 relief. The fourth quarter estimate, Bovino said, was in the single digits, and the lack of a fiscal response could kneecap the recovery.
“The risk is of course that it would be in negative territory,” Bovino said.
While Congress and the White House are currently talking about a much larger fiscal response of $1.8 trillion, the chances of such a package passing soon appear increasingly slim.
Treasury Secretary Steve Mnuchin today cast doubt on the prospects of a deal before the election. The fate of the stimulus could vary dramatically based on the election results.