The Coronavirus Contraction

“Due to fears about the Coronavirus – more specifically, the forceful government measures designed to halt its spread, the US is on the front edge of the sharpest decline in economic activity since the Great Depression.

The US economy was on track to grow at around a 3.0% annual rate in the first quarter before fears and response measures escalated.  Don’t just take our word for it, the GDP model used by the Federal Reserve Bank of Atlanta is still projecting real GDP growth at a 3.1% annual rate in the first quarter.  That model generates a forecast based on the reported data available through March 18th, which reflects all the key economic reports for January as well as some of the key reports on activity for February. 

But we all know the reports for March are going to be horrible.  Initial unemployment claims recently increased 70,000 to 281,000.  We’re projecting an increase to 1,500,000 for last week.  To put this in perspective,” read more here.

Source: First Trust Portfolios L.P.