“Unlike Anything We Have Seen In History”: The Coronacrisis Will Wipe Out Over 4 Years Of GDP Growth

Thursday, May 21, 2020
By Paul Martin

by Tyler Durden
Thu, 05/21/2020

Now that banks have had a chance to evaluate the collapse in the economy in the post-covid world, a new round of GDP forecast revisions is coming, and it’s a doozy, with Bank of America spearheading the latest effort by slashing its Q2 GDP forecast from -30% to -40%.

Not without a trace of irony, BofA’s chief economist Michelle Meyer writes that “words cannot describe” the loss in economic output, which is “unlike anything we have seen in modern history. Back in early April when we introduced our forecasts, we penciled in a stunning 10% cumulative drop in output from the peak with the pain concentrated in 2Q with a 30% qoq saar decline.”

But it seems that it was not extreme enough, and according to data released since then, the drop will be more severe, with BofA now looking for a 40% Q/Q saar decline in 2Q, translating to a cumulative loss of 13%. To put this into perspective, in the Great Recession of ’08-09, the economy declined 4%. This recession would clearly be much deeper.

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