Goldman sees unprecedented stop of economic activity, with Q2 GDP contracting 24%

 POINTS

• Goldman Sachs economists forecast a historically sharp and swift recession, with second-quarter GDP sinking a stunning 24% after a 6% decline in the first quarter.
• The economists had expected a decline of 5% in the second quarter, after a flat first quarter but they said social distancing measures have affected many sectors of the economy and will hit the first and second quarter hard.
• The economists still expect a spring back in the third quarter, of 12%, but they see unemployment peaking at 9%.

“Theater Closed” signs are posted in front of the AMC Montebello, as the US chain of AMC movie theaters closes for 6 to 12 weeks, On March 17, 2020 in Montebello, California, as the coronavirus (covid-19) epidemic leads to restaurant and school closures and workers working from home in an effort to encourage social distancing.Frederic J. Brown | AFP | Getty Images

Goldman Sachs economists on Friday forecast an unprecedented 24% decline in second quarter gross domestic product, following a 6% decline in the first quarter, based on the economy’s sudden and historic shutdown as the country responds to the coronavirus pandemic.

The economists then expect a bounce back of 12% in the third quarter and 10% in the fourth quarter, but unemployment will surge to 9%. They also expect GDP to contract by 3.8% for the full year on an annual average basis, and 3.1% on a fourth quarter over fourth quarter basis. 

Just five days ago, Goldman economists had expected the economy to trough with a decline of 5% in the second quarter after a flat first quarter. They had expected a resurgence in the second half and full year growth of 0.4%……..More Here

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