That's a shocking number

That's a shocking number

Goldman Sachs has been taking its forecasts down in steps and now sees Q2 down 34%, from -24% a fortnight ago. For Q1 they see -9% from -6%.

On US unemployment, they see it rising to 15% by midyear from a peak of 9% previously. That's in excess of the Great Depression.

"While the uncertainty is substantial, we expect the lockdowns and social distancing to result in sharply lower new infections over the next month, and our baseline is that slower virus spread and adaptation by businesses and individuals should set the stage for a gradual recovery in output starting in May/June," they write.

The -34% number would easily be the worst since records began in 1947. The worst quarter in the financial crisis was -8.4%.

Goldman is far from the only one predicting a sharp drop in US output.

  • Deutsche Bank: -2.2% (Q1), -33% (Q2)
  • JP Morgan: -10% (Q1), -25% (Q2)
  • Wells Fargo: 1.2% (Q1), -14.7% (Q2)
  • TD: -3% (Q1), -25% (Q2)
  • Morgan Stanley: -2.4% (Q1), -30.1% (Q2)

Others haven't been updated in two weeks and are sure to draw more gasps when they hit.

See: Goldman Sachs on the 3 things needed to be confident the stock market has bottomed