Goldman Sachs reportedly is now projecting a massive U.S. economic contraction in the second quarter of the year.
The coronavirus pandemic has crippled the transportation, leisure and hospitality industries, as well as the manufacturing sector. The country is struggling to curb the spread of the highly contagious virus, which has upended life for Americans.
Economists are expecting a recession by the second quarter, though some believe a downturn is already underway.
Meanwhile, Goldman is forecasting a 24% decline in economic activity next quarter, compared to their previous forecast for a 5% decline, Barron’s said.
“That’s because U.S. economic data (specifically manufacturing data) have already started to miss economist estimates, even before Americans started to stay home to avoid spreading the coronavirus,” Barron’s said. “Their estimate, published Friday morning, is one of the most pessimistic on Wall Street. J.P. Morgan released estimates Wednesday that predicted a 14% contraction in second-quarter U.S. growth.”
If Goldman’s economists are right, that means the U.S. is approaching the sharpest single-quarter decline in gross domestic product since the U.S. started measuring GDP in its current form, Barron’s said. The current record for the largest quarterly slowdown was in the first quarter of 1958, the bank says, when GDP declined 10%.
Meanwhile, filings for U.S. unemployment benefits are poised to surge to a record 2.25 million this week, according to a Goldman Sachs Group Inc. analysis of preliminary reports across 30 states, Bloomberg said.
With businesses shutting down because of coronavirus-containment efforts, jobless claims are already climbing -- by 70,000 to 281,000 for the week through last Saturday, Labor Department data showed Thursday. That was the biggest increase since Hurricane Sandy in 2012. The level Goldman projects for the week through March 21 is more than triple the prior peak of 695,000, in 1982.
The coronavirus outbreak has forced millions of Americans to hunker down in their homes, with state and local governments closing schools, bars, restaurants and theaters in an escalation of "social distancing" policies aimed at containing the virus, Reuters explained.
Ford Motor Co, General Motors Co and Fiat Chrysler Automobiles NV have announced temporary plant closures.
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