One of the largest banks in the United States has declared that the nation is indeed in a recession and is warning the worst is yet to come as the country deals with the effects of the coronavirus pandemic which has swept across the globe.
According to CNBC, Bank of America U.S. economist Michelle Meyer wrote in a note to investors:
“’We are officially declaring that the economy has fallen into a recession … joining the rest of the world, and it is a deep plunge. Jobs will be lost, wealth will be destroyed and confidence depressed.’
“The firm expects the economy to ‘collapse’ in the second quarter, shrinking by 12%. GDP for the full year will contract by 0.8%, it said.”
The full “magnitude of the economic shock, Bank of America told investors, can be seen in the labor market:
“The firm expects the unemployment rate to nearly double, with roughly 1 million jobs lost each month of the second quarter for a total of 3.5 million.”
Bank of America’s dire economic forecast was echoed by JP Morgan Chase, CNN reports, which just updated its predictions regarding recession:
“‘There is no longer doubt that the longest global expansion on record will end this quarter,’ Bruce Kasman, the bank’s head of economic research, told clients on Wednesday. “‘The key outlook issue now is gauging the depth and the duration of the 2020 recession.
“JPMorgan predicts this will force the US unemployment rate up from 3.5% to 6.25% by the middle of the year, before falling to 5.25% by the end of 2020.”
All of this could not possibly come at a worse time for President Donald Trump, who was hoping to run on a strong economy as he seeks a second term in office. A deep recession could well doom his chances of reelection.
Even more troubling is that many economists expect the worst is yet to come, suggesting the U.S. economy could contract by as much as 5 percent in the next quarter. That alone could leave as many as 3 million Americans without jobs.
For his part, Trump tried his best to shrug off such concerns during a coronavirus press briefing on Wednesday, remarking that he expected the economy to rebound quickly:
“I think there’s a tremendous pent-up demand both in terms of the stock market and in terms of the economy. Once this goes away, once it goes through and we’re done with it, I think you’re going to see a tremendous surge.”
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