Economists warn 2nd quarter contraction will rival 'steepest in history'
The mounting fallout from the coronavirus crisis will push the United States into an unprecedented state of contraction that, depending on the severity and length of government-mandated quarantines, could result in economic upheaval and job dislocation unseen since World War II.
That was the sobering consensus among a trio of economists whose best-case scenario — a hard stop of the U.S. economy that abates by midyear — still would amount to a 9% contraction of economic output and a jump to 6.5% unemployment in the second quarter. The group's worst-case forecast, whereby the crisis triggers parallel slowdowns in household consumption, housing and business activity, would likely trigger economic losses unrivaled in our lifetime.
"In a downside scenario, the economy could contract 14% in the (quarter) outstripping the 10% plunge seen in 1958 and extend the contraction to the second half of the year," wrote Bloomberg economists Carl Riccadonna, Yelena Shulyatyeva and Andrew Husby in a March 20 research report.
A growing body of research and analysis of the coronavirus fallout points to steep job losses ahead, particularly in sectors supported by consumer spending. Approximately 31 million Americans were employed in the retail, hospitality and food-services sectors — considered the most vulnerable in these earliest days of the crisis — as of the beginning of this year, according to the Bureau of Labor Statistics. Nearly two thirds of those workers have access to workplace benefits such as health care and related paid time off, according to federal data.
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