GDP

US GDP could be down 45% this quarter, but then do something very unexpected: economist

Zero to 100 real quick for the U.S. economy, maybe.

“In our baseline outlook which follows the positive testing outcomes, we actually have a very sizable snapback in activity in the third quarter. We’re down 45% in the second quarter [GDP], and then we have it up 35% in the third quarter and then 10% in the fourth quarter. For the year as a whole though, that would mean the economy is down around 6.4% or 6.5%,” said Barclays chief U.S. economist Michael Gapen on Yahoo Finance’s The First Trade.

Second quarter GDP being down 45% is one of the more bearish predictions on the Street. But it could prove to be on the mark judging by the lackluster read on first quarter GDP that only reflects a small sampling of the coronavirus’ effects on households and businesses.

First quarter GDP fell 4.8% versus estimates for a drop of 4%.

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What to expect in the first quarter 2020 US GDP report

At the end of the first quarter, the coronavirus pandemic broadened out across the globe and the country, dragging output to a near standstill.

Market participants are bracing for the first-quarter gross domestic product report to show U.S. economic activity contracted for the first time in six years, and by the most since 2009, as a reflection of the early impact of the outbreak on economic growth.

The U.S. Bureau of Economic Analysis is poised to release its advanced estimate of first-quarter 2020 GDP at 8:30 a.m. ET Wednesday. Here are the main metrics expected from the report, compared to consensus expectations compiled by Bloomberg as of Tuesday morning:

  • 1Q GDP annualized, QoQ: -3.9% expected, +2.1% in 4Q 2019

  • 1Q Personal consumption: -3.5% expected, +1.8% in 4Q 2019

  • 1Q Core PCE QoQ: +1.7% expected, +1.3% in 4Q 2019

Estimates for the size of the first-quarter contraction spanned a wide

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JPMorgan can handle GDP falling at a 35% rate: Dimon

Jamie Dimon says that JPMorgan Chase  (JPM), the largest U.S. bank by assets, is serious about stress testing itself under some enormous numbers as the COVID-19 crisis continues to damage the economy. 

“[We] have run an extremely adverse scenario that assumes an even deeper contraction of gross domestic product, down as much as 35% in the second quarter and lasting through the end of the year, and with U.S. unemployment continuing to increase, peaking at 14% in the fourth quarter. Even under this scenario, the company would still end the year with strong liquidity and a CET1 ratio of approximately 9.5% (common equity Tier 1 capital would still total $170 billion),” Dimon wrote in his widely-read annual letter on Monday.

“This scenario is quite severe and, we hope, unlikely,” he added.

The 64-year-old bank CEO and chairman noted that in this scenario the board would “likely consider suspending the dividend.” 

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Stocks could ‘take out’ the March lows, economists’ GDP forecasts are too optimistic

Billionaire bond investor Jeffrey Gundlach, the CEO of $150 billion DoubleLine Capital, thinks the market will “get something that resembles that panicky feeling again” in April, and the lows reached in mid-March will likely get “taken out.” 

During a markets webcast on Tuesday afternoon, Gundlach presented a chart of the S&P 500 Index (^GSPC) now versus 1929, 2000, and 2007. He noted that the market right now “looks the most like the crash of 1929, unfortunately.” 

He explained that patterns show the market goes to a crash low before a “very sharp snap back,” which is followed by another move down. 

Jeffrey Gundlach says the S&P 500 looks like 1929.

“I think that the low that was hit in the middle of March, I would bet dollars to donuts that low is going to get taken out. So, will it happen in the near-term? Who knows. I think it might

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Coronavirus will send US GDP down a startling 13%: Deutsche Bank predicts

Add another jaw-dropping call to those circling Wall Street as fuel for the bears dominating the current bear market in risk assets (the other one being U.S. Treasury Secretary Steven Mnuchin looking for a 20% unemployment rate sans a coronavirus fiscal relief plan).

Deutsche Bank strategists are out with a note Wednesday calling for U.S. GDP to crash 13% on an annualized basis in the second quarter. To put that into perspective, Deutsche Bank notes the rate of decline would be more than one and a half times the sharpest contraction during the 2008-2009 financial crisis (an 8.4% annualized plunge in the fourth quarter of 2008). Looked at another way, a 13% drop in U.S. GDP — spurred by the coronavirus outbreak causing businesses to grind to a halt as people quarantine and travel is restricted —would mark the sharpest contraction in the post-World War period.

“The U.S. economy is

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