JPMorgan economists reportedly have cut their second-quarter forecast even more, now expecting the economy will decline by 40%.
The economists also see a surge in April’s unemployment rate to 20% with 25 million jobs lost, CNBC said.
In an earlier forecast, they said second-quarter GDP would be down 25%.
A number of Wall Street firms expect contractions in the second quarter of 30% or more.
The economists, however, continue to see a second-half recovery, based on the assumption that disruptions from the pandemic fade by June.
To be sure, the trillions of dollars in cash and loans unleashed by the Federal Reserve and U.S. political leaders in recent weeks is meant to build a financial bridge for the country to get beyond the coronavirus pandemic and restart the economy with little or no long-term damage, Reuters reported.
But that mammoth effort is still likely to leave millions of additional Americans unemployed for an extended time, according to new economic forecasts that see the U.S. unemployment rate not just spiking to Depression-era levels in coming weeks, but remaining above a relatively high rate of 6% through the end of 2021.
That would represent around 4 million people added to the unemployment rolls for the foreseeable future — dousing hopes of a quick return to the pre-pandemic normal where the unemployment rate dipped as low as 3.5% and pay gains were accelerating for lower-wage workers.
"We are going to see some scarring in that regard. It is classic displacement,” said Karen Dynan, a Harvard University economics professor and former Treasury Department official who prepared a new global forecast for the Peterson Institute for International Economics, a Washington-based economics think tank.
After jumping to perhaps 20% in coming months, Dynan said she anticipated the unemployment rate would come down "pretty quickly" into the single digits by the end of 2020.
"But even by the end of next year I think we are still going to be looking at something like a 6% unemployment rate," she said. "A lot of people are not going to get their jobs back."
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