JPMorgan economists expect the U.S. economy to contract by 40 percent in the second quarter of this year and forecast the unemployment rate to surge to 20 percent in April as the coronavirus pandemic continues to wreak havoc.
The strategists are predicting a grimmer outlook compared to the 25 percent GDP decline they had earlier forecast for the second quarter.
“With these data in hand we think the April jobs report could indicate about 25 million jobs lost since the March survey week, and an unemployment rate around 20 percent,” JPMorgan economists wrote in a note.
“Given the expected hit to hours worked this quarter we now look for -40.0 percent annualized real GDP growth in 2Q, down from -25.0 percent previously.”
JPMorgan was among U.S. banks that said there were still no signs of outright capitulation in the market after a steep sell-off as investors in the U.S. have dumped their equity holdings and moved to traditionally safer U.S. Treasurys.
The U.S. has surpassed Italy as the country with the highest number of coronavirus deaths. The world’s largest economy has recorded more than 22,000 COVID-19 deaths, according to NBC News figures.
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“Over the last few weeks, forecasters have been operating in a fog,” wrote JP Morgan economists in a research note. “More recently, however, we are starting to get some shreds of data on the magnitude of the economic crisis.”