Fox Business: Coronavirus Catapulting US into Deepest Recession Since WW2

April 06, 2020

Article by Jonathan Garber in Fox Business

The economic pain caused by the COVID-19 pandemic is just starting to be felt by the world’s largest economy, and it will be the most severe of the post-war era.

U.S. employers shed 701,000 jobs in March and the unemployment rate climbed to 4.4 percent, the Labor Department said Friday, as non-essential businesses were forced to temporarily close their doors to help slow the spread of COVID-19. The virus has infected 1.1 million people worldwide and led to more than 60,000 deaths, according to Johns Hopkins University & Medicine.

“The decline in nonfarm payrolls, of 701,000 jobs, while a sharp reversal from strong January and February employment figures, is going to get much worse in the months to come, as the Bureau of Labor Statistics' surveys catch up with the reality of significant economic shutdowns across most states,” wrote Rick Rieder, chief investment officer of global fixed income at New York-based BlackRock.

Economists at the major Wall Street investment banks all see gross domestic product contracting by at least an annualized 30 percent during the second quarter.

Following Friday’s report, Ellen Zentner, chief U.S. economist at the New York-based investment bank Morgan Stanley, lowered her growth forecast for second-quarter gross domestic product to -38 percent on an annualized basis. She says the U.S. economy will lose 21 million jobs, running the unemployment rate up to 15.7 percent, a level not seen since the Great Depression.

“We expect the U.S. economic recovery will be more drawn out than previously anticipated, marked by a deep drop into recession and slower climb out,” Zentner wrote.

Zentner expects full-year real GDP to contract by 5.5 percent, making for the steepest annual drop since 1946, when the heavy demands of wartime production abated after the surrender of the Axis powers in World War II.

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