ECONOMIC DEVASTATION: Budget Office Estimates GDP Drop of 28 Points in Second Quarter
President Donald Trump used to regularly brag about how the U.S. economy was roaring due to his economic policies, but the coronavirus pandemic has wiped those gains out almost completely.
The non-partisan Congressional Budget Office released a preliminary forecast on Thursday that is dire:
CBO expects that the economy will contract sharply during the second quarter of 2020 as a result of the continued disruption of commerce stemming from the spread of the novel coronavirus. The following are CBO’s very preliminary estimates, which are based on information about the economy that was available through this morning and which include the effects of an economic boost from recently enacted legislation.
- Gross domestic product is expected to decline by more than 7 percent during the second quarter. If that happened, the decline in the annualized growth rate reported by the Bureau of Economic Analysis would be about four times larger and would exceed 28 percent. Those declines could be much larger, however.
- The unemployment rate is expected to exceed 10 percent during the second quarter, in part reflecting the 3.3 million new unemployment insurance claims reported on March 26 and the 6.6 million new claims reported this morning. (The number of new claims was about 10 times larger this morning than it had been in any single week during the recession from 2007 to 2009.)
- Interest rates on 10-year Treasury notes are expected to be below 1 percent during the second quarter as a result of the Federal Reserve’s actions and market conditions.
CBO’s economic projections, especially for later periods, are highly uncertain at this time.
Americans across the country are feeling the pain regardless of what industry they are in. A study from Candor has indicated that 267 companies have instituted a hiring freeze due to coronavirus while 44 have laid off employees and 36 others have been forced to rescind offers because of the pandemic.
“The travel, hospitality, and transportation segment was particularly hard hit, with 95% of companies freezing hiring. Only two companies, Bolt and Cruise, report they are still hiring. All booking platforms — like Kayak, Expedia, and Booking.com — have suspended hiring. Uber and Lyft have a headcount freeze but continue to backfill already open positions. And 12 companies — like Bird, Expedia, Sonder, Mondee, and Knotel — have confirmed layoffs,” VentureBeat wrote in their analysis of the data.
They noted that the companies that are still hiring are doing so at a reduced pace because of the economic carnage caused by coronavirus.
“The good news: 111 companies are hiring. But 10% of those still hiring have implemented some kind of hiring freeze, laid off people, or had offers rescinded. That’s likely because hiring only continues for essential roles,” they wrote.
Forbes has published a run-down of all the companies that downsizing due to the economic calamity. They have compiled information from hundreds of employers showing the number of American workers displaced because of the pandemic.
Unemployment filings are at an all-time high, with 6.6 million beleaguered Americans filing for benefits last week. With President Trump recently announcing that he has extended his national stay-at-home recommendations until Apr. 30, the worst economic damage could be yet to come.