Event and entertainment workers protest unemployment in Las Vegas on August 19th.
BRIDGET BENNETT / AFP via Getty Images]
While the economy appears to have recovered strongly from the blow of the pandemic, it is actually a "steroid recovery," JPMorgan Asset Management's David Kelly told CNBC.
"We saw what looks like a V-shaped recovery, but it's really V-broken – it's half the V," said the chief global strategist. A V-shaped recovery is one in which an economy rises sharply after a recession.
He said that growth will slow down again once the shot in the arm of fiscal stimulus wears off.
"It looks like an economic recovery, but it really is some kind of steroid recovery. If the fiscal stimulus steroid is removed, the economy will grow more slowly … it will grow much more slowly in the fourth quarter than it will in the third," Kelly told CNBC on Thursday.
While half of the jobs lost in the US have been restored, he said it will "still be a creep" before industries shut down by the pandemic can reopen.
The US economy has regained around 11.4 million jobs – or around half of all jobs lost. The unemployment rate has fallen to 7.9% but is still more than double what it was before the pandemic. However, the new claims in the week of October 10th rose to their highest level since August 22nd as cases mount in another wave.
"You have to cope with the pandemic in order to recover healthy. It's that simple," said Kelly.
There will be "too much" stimulus
Millions of Americans await more government aid to meet their food and housing needs during this crisis as Washington remains in a stalemate over further coronavirus stimuli.
But Kelly says the country will receive a stimulus package after the November presidential election.
"I think we're going to get suggestions anyway. I think people are obsessed with whether we get any suggestions in the next two weeks," he said. "What goes on between the White House and the House Democrats has everything to do with politics. After the elections, I think there will be a stimulus package."
"In fact, I think, if anything, there will be too much incentive," Kelly said.