The Conference Board has developed three scenarios that may play out in the U.S. economy through the remainder of 2020 that reflect the uncertainty over how the pandemic will progress and how the economic response to this crisis could develop over the next few months. The scenarios take into account the effects of government stimulus coming through, although the precise effects of the $2 trillion stimulus bill on different sectors and expenditure categories have not yet been fully assessed.

In its analysis, the first scenario—a May Reboot or “quick recovery”—assumes a peak in new COVID-19 cases by mid-April, with economic activity gradually resuming in May. In the second scenario—a Summertime V-Shape, or “deeper contraction, bigger recovery”—the peak in new cases will be higher and delayed until May, creating a larger economic contraction in the second quarter but also a stronger recovery in the third quarter. In the third scenario—a Fall Recovery or “extended contraction”—a managed control of the outbreak helps to flatten the curve of new COVID-19 cases and stretches the economic impact across the second and third quarters, with growth resuming in September. To build these scenarios, The Conference Board used an industry-based approach, making assumptions on the percentage contraction by major sector and by month.

“The impact on the economy is different across the three scenarios,” says Bart van Ark, chief economist of The Conference Board. “In our most optimistic scenario, the economy will shrink to 1.6 percent in 2020 compared to 2019. However, the contraction will be much stronger under the Summertime V-shape (5.5 percent) and the Fall Recovery (six percent) scenarios. Businesses should prepare for those worst-case scenarios, given their high probability of occurring.”

The impact of the crisis will differ substantially between sectors and industries, according to organization’s analysis.

“The largest effects are seen in industries that are mostly hurt by social distancing and other containment measures, including entertainment, restaurants and large parts of the transportation sector,” says Erik Lundh, senior economist at The Conference Board. “However, the longer the contractions last, the more industries will be impacted through revenue losses and cost containment measures.”

Regardless of which scenario will ultimately play out, the impact on the unemployment rate is expected to be significant. In the first scenario, the unemployment rate will rise to eight percent by third quarter and then gradually drop off during the second half of the year. In the other two scenarios, unemployment may increase to more than 15 percent by third quarter and—especially in the case of the Fall Recovery scenario—remain at 10 percent or more until fourth quarter.

In The Conference Board’s analysis, the worst effects on the economy can be mitigated by at least four policy factors: a strong and coordinated management of the health crisis, the use of policy tools to reduce layoffs, fiscal policy tools that can reach lower-income consumers and small businesses quickly, and a cautious but clearly guided reboot of the economy, with a focus on the speedy unlocking of supply chains.

The Conference Board is a not-for-profit, non-partisan think tank founded in 1916. For a deeper look at The Conference Board’s recovery scenarios, click here.