The Coronavirus Contraction. Our best guess – and, at this point, given the unprecedented nature of the situation, anyone who calls it anything other than a “guess” should be taken with a grain of salt – is that the US economy will contract at about a 35-40% annual rate in both March and April, stabilize in May, and then start growing again, gradually, in June. Translating this into quarterly changes, we’re projecting a 1.5% annualized decline in Q1, a massive 20% annualized drop in Q2, but with the economy growing at a 3.0% annual rate in Q3 and a 3.5% rate in Q4 and beyond.
Fed Fires Bazooka at Coronavirus Virus. The Fed’s statement made it clear it is going to keep rates near zero until the economy has weathered the Coronavirus and is on track to meet the Fed’s targets for the job market and inflation. In the press conference, Fed Chief Jerome Powell said the Fed will be “patient,” which means it’s going to be a while before we see rates go back up.
A Coronavirus Recession? No one knows with any real certainty how much, or for how long, the Coronavirus will impact the US economy. What we do know is that it will have an impact. And, after data releases of recent weeks, we also know that the US economy was in very good shape before it hit.