JPMorgan Foresees An Apocalyptic Second Quarter, With Unemployment Hitting 20 Percent

JPMorgan economists expect the second quarter to be a bad one, with 25 million jobs lost and a sizable chunk taken out of the country’s gross domestic product as the coronavirus pandemic hits its stride.

They foresee a 40% decline in the GDP and a surge in April’s unemployment rate to roughly 20%. Economists previously forecasted the GDP dropping 25% in the second quarter. This all comes as states and local governments continue staggered locks down amid the pandemic.

JPMorgan economists are pegging their hopes to a second-half recovery based on the assumption that the panic will have subsided by June.

“Over the last few weeks forecasters have been operating in a fog. Economic models that have been trained on post-war data face obvious limitations. In their place we have reverted to differing ways to address the outlook,” the economists wrote in a note.

They added: “The long-run destruction of the level of output is difficult to quantify, but likely quite large.” JPMorgan issued the forecast after Thursday’s jobless claims jumped to 6.6 million workers with a decline in hours worked.

The economy ground to a halt as Americans began employing social distancing guidance to combat the coronavirus, or COVID-19, which originated in Wuhan, China, before traveling to the United States, where it has killed more than 13,000 people.