Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
The spread of COVID-19 to the US is causing a sharp contraction
in spending on activities that involve travel and congregating in
public. Given the speed of these developments, we are taking the
unusual step of updating our base forecast for the US between
scheduled releases. We now expect a recession to begin in the
second quarter.
With global growth slowing sharply, financial conditions
tightening dramatically, energy prices plunging, and "social
distancing" forcing cancellations of sporting events, Broadway
shows, dinner reservations, travel plans, conventions, etc., we now
expect a sharp decline through June in "at-risk" personal
consumption expenditures (PCE) on services to precipitate a
consumer-led recession beginning in the second quarter and lasting
through the end of the year.
The peak-to-trough decline in GDP is 2.3%, with the unemployment
rate rising to 6% by mid-2021, and core PCE inflation slipping
below the Fed's 2% objective.
This puts GDP growth for 2020, measured year-over-year, at
-0.2%, and at +0.8% for 2021; the corresponding growth rates,
measured 4th-quarter-to-4th-quarter, are -1.9% and +2.7%.
A recovery, starting in the first quarter of 2021, will be
impeded by lack of monetary policy space and an inadequate fiscal
response.
We anticipate that GDP will contract at a 5.4% annualized rate
in the second quarter. With slowing global growth undercutting
export demand, additional wealth effects from plunging equity
prices, a drop in domestic production of crude oil and energy
exploration, and induced multiplier effects from all of the above,
a -5% print for second-quarter GDP growth doesn't feel like a
stretch. Even as consumer spending begins to recover during the
summer, the legacy effects of the second-quarter contraction of
PCE, continuing declines in energy exploration and production, and
weak overseas growth will result in negative growth of US GDP
averaging about -1.9% (annualized) over the second half of the
year.
Posted 16 March 2020 by Joel Prakken, Chief US Economist and co-head of US Economics, Research Advisory Specialty Solutions, S&P Global Market Intelligence
{"items" : [
{"name":"share","enabled":true,"desc":"<strong>Share</strong>","mobdesc":"Share","options":[ {"name":"facebook","url":"https://www.facebook.com/sharer.php?u=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2fcovid19-to-precipitate-us-recession-in-2nd-quarter.html","enabled":true},{"name":"twitter","url":"https://twitter.com/intent/tweet?url=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2fcovid19-to-precipitate-us-recession-in-2nd-quarter.html&text=COVID-19+to+precipitate+US+recession+in+2nd+quarter+%7c+S%26P+Global+","enabled":true},{"name":"linkedin","url":"https://www.linkedin.com/sharing/share-offsite/?url=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2fcovid19-to-precipitate-us-recession-in-2nd-quarter.html","enabled":true},{"name":"email","url":"?subject=COVID-19 to precipitate US recession in 2nd quarter | S&P Global &body=http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2fcovid19-to-precipitate-us-recession-in-2nd-quarter.html","enabled":true},{"name":"whatsapp","url":"https://api.whatsapp.com/send?text=COVID-19+to+precipitate+US+recession+in+2nd+quarter+%7c+S%26P+Global+ http%3a%2f%2fwww.spglobal.com%2fmarketintelligence%2fen%2fmi%2fresearch-analysis%2fcovid19-to-precipitate-us-recession-in-2nd-quarter.html","enabled":true}]}, {"name":"rtt","enabled":true,"mobdesc":"Top"}
]}
