May 29, 2020
Given the government’s response to the corona virus, the economy has stopped dead in its tracks. It started to fall precipitously in March. More than 40 million workers have lost their jobs since mid-March. Payroll employment fell by 20,500 workers in April and we expect an additional 3.0 million workers in May. As a result, we now expect GDP to decline 60.0% in the second quarter. The unemployment rate should reach a peak of 15.5% in May.
However, we are now seeing signs that the rate of spread of the corona virus is beginning to slow. As a result, most states are at least partially re-opening. At the same time, $2.5 trillion of fiscal stimulus checks are being disbursed. As a result, we expect the economy to rebound by 61.0% in the third quarter and a further 7.0% growth rate in Q4.