An Uncertain Future: Predicting the Economy After COVID-19

Abby Joseph Cohen and Alexis Crow share insights on the economic impact of COVID-19 in a discussion moderated by Pierre Yared. 

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Abby Joseph Cohen, advisory director and senior investment strategist at Goldman Sachs, says there is a growing consensus among analysts that by the end of 2021, the economy will return to where it was in early 2020.

But that forecast comes with a stark warning.

“There are plenty of things that could go wrong,” she says, noting worrying recent health data that more people are testing positive throughout the US, even as infections have gone down in New York.

In a conversation on the effect of COVID-19 on the global economy with Alexis Crow, head of Geopolitical Investing at PWC, Cohen notes that while data collection has improved in recent weeks, many investors remain unsure of the future financial landscape.

“We think that the second quarter will be the single worst quarter for the US economy,” Cohen says, with the caveat that analysts have lower than average confidence in their figures. “We think that overall GDP in the US will be down six percent and the unemployment rate will be incredibly high in the second and third quarter.”

According to Crow, Senior Fellow at the Richman Center for Business, Law, and Public Policy at Columbia University, there are many “unknowns,” for both manufacturing and service sectors worldwide, and that much depends on the epidemiological reports from health officials.

Crow believes the economy will be W-shaped in the coming months and that much of the economic disruption due to the pandemic will exacerbate existing weakness in the global economy.

“I think it’s going to take two years for any stability to be realized,” Crow said. “My outlook would be slightly direr, looking at three to four years before a return to robust profitability in some sectors.”

During the discussion, moderated by Pierre Yared, the MUTB Professor of International Business and Vice Dean for Executive Education, Cohen and Crow also compare the current downturn to the Great Recession as well as discuss the implications of the pandemic on income inequality and trade with China.

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