NEW YORK–With some U.S. health officials warning that a full 14-day national shutdown may soon be needed and additional countries announcing a closing of borders, economists are increasingly making dire forecasts. But others are offering reassurances that the U.S. economy will come roaring back.
First, the bad news, according to a compilation of forecasts assembled by the New York Times.
- Data released by China on retail sales, industrial production and unemployment was shockingly bad.
- Most economists expect a “major recession,” according to a new survey by the University of Chicago
- A new forecast from Goldman Sachs projects zero GDP growth in the U.S. in the first quarter and a steep 5% decline in the second.
- Unicredit is projecting the eurozone economy will shrink 0.2% in the first quarter and around 1% in the second
- A new forecast from Goldman Sachs expects zero GDP growth in the U.S. in the first quarter, and a steep 5% drop in the second.
- Both sets of analysts expect an equally sharp rebound in the second half of the year, resulting in annual average growth of 0.4% in the U.S. and 0.1% in the Eurozone.
- The Centre for Aviation issued a stark warning: “By the end of May 2020, most airlines in the world will be bankrupt” — unless governments around the world coordinate to help save the industry.”
The Good News
Now, the good news:
- Deutsche Bank analysts said they believe the steeper the fall in the short term — driven by travel bans, business closings and the like — the stronger the recovery. The U.S. recession after the 1918 flu pandemic lasted for seven months, around half the average for recessions over the past century or so.
“While our anxiety is likely to skyrocket over the next several days, I expect that by the end of this coming week, things will have finally reached a climax,” writes Peter Atwater of Financial Insyghts. “It will be messy, but you shouldn’t be afraid of it, nor expect it to continue.”