Economists at JPMorgan, America’s biggest bank, said the severity of the pandemic would likely result in a 40 percent drop in the country’s gross domestic product (GDP) and lead to a jobless rate of 20 percent.
“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,” the analysts wrote, CNBC reported. “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.”
It comes after JPMorgan Chase Chief Executive Jamie Dimon wrote in his annual letter to shareholders (pdf) that he expects “a bad recession.”
“We don’t know exactly what the future will hold—but at a minimum, we assume that it will include a bad recession combined with some kind of financial stress similar to the global financial crisis of 2008,” he said.
The country wasn’t prepared for a pandemic, but “we can and should be more prepared for what comes next,” he added.
The new analysis follows an earlier Goldman Sachs forecast that predicted a 34 percent plunge in the second quarter, and a Bank of America forecast that expects unemployment to soar to over 15 percent.
But JPMorgan economists, as well as Bank of America and Goldman Sachs, all expect a sharp rebound after the pandemic subsides.
The predictions follow staggering weekly jobless claims figures, which showed that, over the past three weeks, almost 17 million Americans have filed for unemployment.
Efforts to give the U.S. economy the best chance for a sharp bounceback have come from a historic COVID-19 relief bill, as well as recent measures by the Treasury and Federal Reserve to channel money to America’s small and medium-sized businesses to encourage them not to lay people off.
Separately, Fed Chairman Jerome Powell said the central bank will continue to use all the tools at its disposal until the U.S. economy begins to rebound fully.
Speaking in a webcast from the Brookings Institution on April 9, Powell said the Fed fully intends to use its powers “forcefully, proactively and aggressively until we are confident that we are solidly on the road to recovery.”
President Donald Trump, meanwhile, has sought to balance the needs of Americans to make a living with restrictions intended to save lives. The president said at an April 9 White House briefing that economic shutdowns across the country have exacted “a tremendous toll, mentally, on a lot of people.”
“I think we’re going to open up strong. I think we’re going to open up very successfully, and, I’d like to say, even more successfully than before,” Trump said, adding that, “We’re going to be opening up … very, very, very, very soon, I hope.”