Coronavirus is causing a disastrous impact on the economy. Now, Wall Street economists forecast things will get worse in the future.
Ian Shepherdson, a chief economist at Pantheon Macroeconomics, says things will get worse.
“We now guesstimate that second-quarter GDP will drop at a 10% annualized rate, after a 2% fall in Q1,” said Ian Shepherdson, said in a note to clients on Monday.
His forecast suggests consumer spending will decrease in the next few months.
“We are becoming more pessimistic about the near-term economic outlook,” Shepherdson says.
“Discretionary consumers’ spending — that is, consumption excluding housing, healthcare, food, and energy — accounts for some 39% of GDP, and some of the major components are set for massive second quarter meltdowns… We are penciling-in a 20% plunge in discretionary consumers’ spending in the second quarter, enough alone to subtract some eight percentage points from GDP growth.”
On Monday, Shepherdson told the New Yorker, the economic hit by the Coronavirus will be “catastrophic.”
On Tuesday, retail sales decreased by 0.5% last month as it was expected to rise by 0.2%; This is the worse retail sales since 2018.
“Shoppers kept their wallets surprisingly closed in February with slower spending on cars, furniture, electronics and restaurants and bars,” said Greg Daco, chief U.S. economist at Oxford Economics.
“With strict measures restraining social activities now in place to contain the coronavirus outbreak, consumer spending is poised for a severe pullback in coming months.”
Many economists believe the world economy will turn into a recession. However, at this time, we do not know for how long.
In related news, President Donald Trump advised limiting social interactions and gatherings to 10 people or less. The number of municipalities calling for people to engage in social distancing due to the coronavirus pandemic is rising. On Tuesday, health officials have issued an important message for all Americans to limit social interactions to help healthcare systems prevent a rise of patients. As of Tuesday, 87 Americans have died with 4,490 infections, an increase of 1,000 confirmed infections from Sunday.