Bank of America economic forecast has U.S. GDP declining 10.4% in 2020 and recovery not starting until Q4
By Larry Walsh
The latest economic outlook from Bank of America amid the COVID-19 pandemic is grim. The U.S. economy will contract five times more than it did for any other recession since World War II and the recovery won’t start in earnest until late in the third quarter or in the fourth.
The Lowdown: According to the Bank of America Global Research team, the U.S. economy declined sharply in the first three months of the year as the COVID-19 pandemic disrupted every business sector. Since social distancing measures started keeping businesses from opening and people going to work, more than 10 million Americans filed for unemployment benefits. And that’s just the tip of the iceberg.
The Details: The immediate impact of the COVID-19 pandemic on the U.S. economy was a 7% (annualized) decline in first-quarter economic activity. Bank of America forecasts that economic output will decline 30% in the second quarter and 1% in the third quarter. While the research report doesn’t give a forecast for the fourth quarter, other reports indicate that second-half 2020 economic growth could surge as much as 19%.
The Impact: The totality of the impact remains uncertain. Bank of America believes the recovery will start in the third quarter (this summer), but slowly as consumer confidence and spending power will be sapped by the cratering of the economy in Q2. Bank of America also expects supply-chain disruptions and shortages to hamper initial recovery attempts.