A lot of numbers are being thrown around, including the unemployment rate, which is possibly as high as twenty percent. The nation has never seen anything like that. We will probably never see a recovery like the one we’ve got coming up. According to the bank of America survey of these investors, big-time money managers think we’re going to have they call a u-shape a path out of recession.
We ask for comments for Chief Economist at KPMG Constance Hunter:
“Based on our assumption that we will more or less be able to resume economic activity by June 15th. We’re looking at more of a u-shape
but let me first explain something about the way GDP statistics are reported, so what we tend to look at is the quarter-over-quarter seasonally annualized rate.
So, basically, if you think about it, a shorthand way to think about it is if you took the quarter-over-quarter and multiplied by 4. That’s why you see this big huge decline and then a big huge bounce back.
If we look at it more on a year-over-year basis, we’re looking year-over-year for GDP to fall about 8% for two quarters then falling about 4% then 3% and then slowly rebounding in the second half of 2021.
By analyzing this basis, we get a big drop and then a big increase, but in terms of the level we don’t get back to the level now it’s for 2022
and those are really important distinctions to think about.
did we have enough momentum particularly in January-February and even early March that maybe we can rekindle some of that once we are back and running as a nation
Certainly, if we will come into this stronger is helpful because households have more savings, businesses have more cash on hand, but right now, it’s like we’re jumping off the cliff without a bungee cord. Right now, we are in real severe freefall.
We’re looking at having 25 million people file claim unemployment in April, and we’re looking at an 18 percent unemployment rate, so it is a really really difficult situation.
The problem is instead of keeping people attached to their jobs and paying firms directly to keep people employed, what we did instead – we let firms lay people off and then retroactively apply for assistance.
Once people get separated from their jobs, it becomes that much harder to restart the economy.
We need a couple hundred billion more and really see that it targeted to small and medium-sized businesses firms with under 50 people, which make up about 50 percent of our employees. For these firms making sure they can stay open and keep their people employed is really important for us to push that restart button.”