As the coronavirus outbreak has resulted in 16.8 million unemployment claims, and approximately one-third of Americans not paying April rent, JPMorgan predicts gross domestic product (GDP) will crater during the second quarter of 2020.
Economists at the bank, which was founded as Bank of Manhattan in 1799, forecast that the GDP will plummet 40 percent during the spring. Overall unemployment, they predict, will climb to 20 percent in April. 25 million jobs will be lost.
The plunge would be the worst in U.S. history. Credit Suisse places the worst quarterly drop during the 2008 crash at 8.4 percent.
If social distancing guidelines and stay at home orders are eased for much of the country, JPMorgan predicts a 23 percent and 13 percent increase to close out the year.
The Trump administration’s top economic officials eye May for a return to normal business, despite health experts’ emphasis on prolonged social distancing measures to defeat the coronavirus.
Comments from U.S. Treasury Secretary Steven Mnuchin and White House economic adviser Larry Kudlow are pushing for reopening of the economy.
“As soon as the president feels comfortable with the medical issues, we are making everything necessary that American companies and American workers can be open for business and that they have the liquidity they need to operate the business in the interim,” said Mnuchin.
Kudlow calls for an opening on a “rolling basis” over the coming months.
“Our intent here was, is, to try to relieve people of the enormous difficult hardships they are suffering through no fault of their own,” Kudlow said.
A national plan is needed for reopening the economy, Federal Reserve chair Jerome Powell said on Thursday. “While we all want it to happen as quickly as possible, we all want to avoid a false start, where we partially reopen and that results in a spike in coronavirus cases and then we have to go back again to square one,” he said.