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The US economy has fallen into a recession because of the Chinese virus pandemic that will make for a “brutal” three months ahead, Bank of America warned Thursday. The bank expects the nation’s gross domestic product to plunge a record 12 percent in the second quarter of this year after meager growth of 0.5 percent …
The US economy has fallen into a recession because of the Chinese virus pandemic that will make for a “brutal” three months ahead, Bank of America warned Thursday.
The bank expects the nation’s gross domestic product to plunge a record 12 percent in the second quarter of this year after meager growth of 0.5 percent in the first quarter.
“Jobs will be lost, wealth will be destroyed and confidence depressed,” Bank of America US economist Michelle Meyer said in a note. “The salvation will come if there is a targeted and aggressive policy response to offset the loss of economic activity and ensure a sound financial system.”
Private payrolls will lose 1 million workers a month in the second quarter as the coronavirus crisis forces layoffs, according to the bank. That will lead the unemployment rate to peak at 6.4 percent in July, Bank of America says, nearly double February’s rate of 3.5 percent.
The economy will likely bottom out in April and then slowly return to growth afterward, the bank said, but GDP is still expected to contract 0.8 percent for the full year.
“Although the decline is severe, we believe it will be fairly short lived,” Meyer wrote.
Bank of America joined the chorus of finance giants declaring that a recession is underway as the coronavirus brings parts of the economy to a screeching halt. Others include Goldman Sachs and Morgan Stanley.
