Bank of America’s chief U.S. economist has said that the country is officially in a coronavirus recession, while others are warning that the downturn could eventually rival the scale of the Great Depression.
In a note to clients on Thursday, Bank of America economist Michelle Meyer said the U.S. economy is in a ‘deep plunge’ brought on by the global coronavirus pandemic.
‘We are officially declaring that the economy has fallen into a recession … joining the rest of the world, and it is a deep plunge,’ Meyer wrote, according to CNBC. ‘Jobs will be lost, wealth will be destroyed and confidence depressed.’
‘When it comes to the policy response, there should be no upper bound for the size of stimulus, in our view,’ she reportedly wrote.
Visitors to the Department of Labor are turned away at the door by personnel due to closures over coronavirus concerns, Wednesday in New York. Applications for jobless benefits are surging in some states as coronavirus concerns shake the U.S. economy
Volunteers at Hook Hall prepare care packages for scores of suddenly unemployed restaurant and hospitality workers in Washington, DC on Thursday
November 16, 1930: A ‘soup kitchen’ in Chicago is opened for the hungry and homeless by gangster Al Capone during the Great Depression
The company expects the unemployment rate, around 3.6 percent as of January, to nearly double, with roughly 1 million jobs lost each month of the second quarter for a total of 3.5 million.
The note predicted that economy would ‘collapse’ in the second quarter, shrinking by 12 percent, and for annual GDP to be down 0.8 percent.
Meyer did add that while ‘the decline is severe, we believe it will be fairly short lived.’
However, if draconian containment measures remain in place for long, such as the 18-month scenario forecasted by some experts, the economic damage could be severe and long-lasting.
Kevin Hassett, the Trump administration’s former chairman of the Council of Economic Advisers, told CNN on Thursday that if everyone stays home for six months, ‘it is like a Great Depression.’
Hassett said the April jobs report will be ‘the worst jobs number you ever saw.’
Unemployment claims already spiked in the latest weekly data released on Thursday.
In the week ending March 14, the number of people seeking unemployment aid soared by 70,000 to 281,000, the Labor Department said Thursday.
That figure is still low historically, but it may soon surpass the record high of 650,000 in January 2009.
An employee of Junior’s Restaurant, right, picks up her final paycheck on Thursday in Brooklyn. The restaurant company has laid off 650 of 850 employees
A worker in Las Vegas cleans a pedestrian overpass near the Excalibur and Mandalay Bay hotel-casinos after Nevada Governor Steve Sisolak shut down all nonessential businesses
Tens of thousands of laid-off workers have already flooded state unemployment websites across the country to apply for jobless benefits, crashing the websites in a half-dozen states.
In Ohio, more than 48,000 people applied for jobless benefits just this Monday and Tuesday. That’s up from 1,825 in the same two days the prior week.
And in neighboring Pennsylvania, about 70,000 people sought unemployment aid on Tuesday, six times the total for the entire previous week. A flood of claims has crashed unemployment claims websites in New York, New Jersey and states across the nation.
Layoffs are rippling through many companies, large and small. Each one means less income for those out of work, forcing them to cut spending, which can push still other businesses to cut jobs. Marriott International said Tuesday it has begun to furlough tens of thousands of employees. Furloughs are essentially temporary layoffs. Furloughed workers can receive unemployment benefits.
The three major American automakers are temporarily shutting their North American factories, idling 150,000 workers. So are Toyota and Honda.
Smaller companies have shut their doors with little time to prepare. Restaurants, bars, movie theaters, gyms, and other firms have been ordered to close by states and cities.
IKEA is shutting all 50 of its US stores, as it becomes the latest business casualty caused by the coronavirus pandemic.
Empty trolleys are stored in front of a closed IKEA store. IKEA is shutting all 50 of its US stores, as it becomes the latest business casualty of coronavirus
The world’s biggest furniture brand announced the news Thursday, as experts warned that US businesses will lay off millions of Americans over the next few months.
The travel industry is at risk of being particularly devastated, with airlines grounding planes and hotels increasingly empty.
The U.S. Travel Association predicts that 4.6 million jobs in the industry could be lost, which by itself would push the unemployment rate to 6.3%, from its current level of 3.5%.
Jon Bortz, CEO of Pebblebrook Hotel Trust, which owns 54 hotels in major cities including New York, San Francisco and Seattle, said occupancy levels have dropped into the single digits.
The company has laid off more than 4,000 of its 8,000 employees, and is likely to let go another 2,000 by the end of March, he said.
‘We are looking at closing the doors at more than half of our properties,’ he said.
Industries call on Trump to send federal relief
Several industries have called on the government to provide federal relief to help keep them afloat.
Fast food giants, restaurants, hoteliers and airlines have all met with the president to urge for assistance as the outbreak derails their industries.
President Trump signed a multi-billion dollar coronavirus bailout bill into law late Wednesday.
The total package of around $1 trillion would provide checks to Americans who have been affected by the virus.
It will also provide support for small businesses and big companies, including including a $50 billion package to support the airline industry.
Trump said Wednesday that airlines would be ‘No. 1’ to receive government relief during the pandemic.
Airlines had made repeated calls for a $50 billion assistance package but for half to be paid directly so they can access it right away.
The Senate is expected to unveil a third coronavirus economic relief package on Thursday, which is expected to focus on providing relief for Americans suffering fallout from the outbreak and bailouts for big businesses in the airline and hospitality industry.
The National Restaurant Association penned a letter to the president asking for association’s request includes creation of a $145 billion Restaurant and Foodservice Industry Recovery Fund to provide immediate liquidity to operators, $100 billion of federally-backed business interruption insurance and $135 million of disaster unemployment assistance.
‘As an industry that is based on welcoming everyone through our doors, we are uniquely affected by mandates that keep us from serving our customers,’ the letter said. ‘Without aggressive and immediate action from the federal government, many restaurants that are a staple of local communities will simply never resume service.’
The letter also asked for $45 billion of loans, $35 billion for federal community block grants for disaster help and tax relief.