Economy May Shrink by Record 24% in 2nd Quarter, Says Goldman Sachs

America may already be in a recession and people could see their economy shrink by a seasonally-adjusted annualized rate of 6 percent in the first quarter of 2020, and by a jaw-dropping 24 percent in the following quarter, according to a new analysis from Goldman Sachs.

In the event Goldmans prediction for a Q2 tumble of 24 percent holds, it would make it the biggest single-quarter drop in the history of U.S. gross domestic product (GDP), as it is now measured.

The record so far for the biggest quarterly GDP drop is in Q1 of 1958, when output plummeted by 10 percent.

Goldman analysts explained what they acknowledged was an “extreme forecast” in a research note cited by The Street.

For the outsized impact, they blamed the COVID-19, the disease caused by the CCP virus, pandemic.

“The sudden stop in U.S. economic activity in response to the virus is unprecedented, and the early data points over the last week strengthen our confidence that a dramatic slowdown is indeed already underway,” they wrote.

The Epoch Times refers to the novel coronavirus as the CCP virus because of the Chinese Communist Partys initial coverup and mismanagement of the outbreak, which allowed the virus to spread across China and become a global pandemic.

“Over the last few days, social distancing measures have shut down normal life in much of the US,” the Goldman analysts said, The Hill reported.

In a previous forecast for the worlds largest economy, Goldman analysts said in a March 15 note that they expected U.S. GDP would recede by 5 percent in Q2 after flatlining at zero in the first quarter, as Bloomberg reported.

In that note, Goldman analysts said their forecast was based on expectations for a GDP rebound in the third and fourth quarters, of 3 percent and 4 percent respectively.

They blamed cuts to travel, entertainment, and restaurant spending, along with fractured supply chains and tightening financial conditions.

“Now the whole world, almost, is inflicted with this horrible—with this horrible virus and its too bad,” President Donald Trump said at a Thursday White House briefing. “Its too bad because we never had an economy as good as the economy we had just a few weeks ago.”

In a Wednesday meeting with representatives of the tourism industry, U.S. Travel Association CEO Roger Dow said the travel slowdown could wipe out hundreds of billions in total travel spending and lead to millions of job losses.

“The numbers are $355 billion is what were going to lose, 4.6 million employees will be out of work, and were predicting unemployment will go to 6.3 percent,” he told Trump.

“So, its now—its serious,” Dow said.

Jobless Claims Could Surge 700 Percent

Separately, a Goldman Sachs analyst said that the next round of initial jobless claims, a measure of Americans filing new unemployment claims, could soar to 2.25 million due to the COVID-19 hit to the economy, which would be over 700 percent higher than the most recent figure.

The Department of Labor said in a release that last weeks jobless claims came in at a seasoRead More – Source