Economists at Goldman Sachs are forecasting a 24% drop in gross domestic product in the second quarter, according to a research report released Friday.
The stunning drop is expected to follow a 6% contraction in the first quarter, the analysts said, and will be followed by a gradual return to growth in the rest of the year, with 12% growth in the third quarter and 10% growth in the fourth. (All rates are on an annualized basis.)
All told, that would put full-year growth at -3.8% in 2020.
“Over the last few days social distancing measures have shut down normal life in much of the US,” the economists said. “News reports point to a sudden surge in layoffs and a collapse in spending, both of which appear to be historic in size and speed. We are therefore making further large downward revisions to our economic forecast.”
In a separate report, analysts at Bank of America asked Eric Feigl-Ding, an epidemiologist and health economist at Harvard University, for his outlook on the likely duration of the Covid-19 crisis in the U.S. "Americans do not understand what has happened in Wuhan and the rest of China,” Feigl-Ding said. “Some Americans think everything is going back to normal in a month, and that is delusional. The US doesn't have the manpower for the containment and contact tracing/quarantine approach [used in China]. We are not looking at a one month recession but a 2-3 month depression at least."