The recession that economists have been forecasting for the U.S. and the world has begun, according to some bank analysts.
“The U.S. recession is here,” reads Thursday morning’s U.S. Economic Viewpoint report from Bank of America.
It’s forecasting a 12% decline in U.S. GDP for the second quarter and a 0.8% decline for the year, fourth quarter over fourth quarter. JPMorgan Chase is forecasting a 14% drop in U.S. second-quarter growth and 1.9% for the year.
Globally, BofA is forecasting 0.3% growth for the year, with a 1.3% decline in developed markets and 1.4% growth in emerging markets, while JPMorgan sees 0.5% growth for the year with a 0.8% decline in developed markets and 2.5% growth in emerging markets.
“We now expect COVID-19 to cause a global recession in 2020 of similar magnitude to the recessions of 1982 and 2009,” write BofA economists. “Among the big-three economies, the U.S. and the euro area will see negative growth while Chinese growth is expected to come in at a paltry 1.5%.”
JPMorgan economists see a contraction of the U.S. and European economies in the first quarter accelerating in the second. “These outcomes are worse than were recorded during the global financial crisis or the European sovereign crisis,” according to the economists, led by Bruce Kasman.
Both JPMorgan and Bank of America, as well as Wells Fargo, are currently forecasting a rebound in the second half of the year in the U.S. and Europe based on the assumption that the spread of the virus would have peaked in the second quarter, but they admit that the outlook remains very uncertain.
“Forecast uncertainty is high,” write BofA U.S. economists, led by Michelle Meyer.