Updated Forecasts for Economic Growth and the Job Market

Economists continue to downgrade their outlook for the economy (see article from Fortune.com).    GDP forecasts range from the optimists: JP Morgan forecasting a 14% decline in Q2 to Morgan Stanley's forecast of a 30% decline (Bank of America and Goldman Sachs anticipate about a 25% decline).  As noted in a previous post, it has not declined by more than 10% since quarterly data became available just after WW2.  Given this economic collapse, Goldman Sachs predicts an unemployment rate of 12.8% in the second quarter (compared to 3.5% in February), the highest since the Great Depression.  When was the last time unemployment rose by more than 9 percentage points in a quarter (from 3.5% to 12.8%)?  No, not during the Depression (the good news is that this is not expected to last as long as the Great Depression).  In case you're wondering, here's a chart for monthly unemployment during the Depression:

Economists (and everyone else) know that the economy is experiencing its largest downturn since the 1930s, but have been waiting for data that will show the extent of the damage.  Some of that data were released today (for various countries).  Today's report for new claims for unemployment insurance for Canada showed 929,000 new applications (5% of the labor force; to understand how large that is, 5% of the labor force would be more than 8 million people for the US).  The report for new claims for unemployment for the US will be released on Thursday, with forecasts ranging from 2 to 4 million, far exceeding any previous week.  Economists with the Economic Policy Institute share the following chart:

Yes, people will be talking about this period for generations to come.  The good news is that March comes in like a lion ... (OK, it won't go out like a lamb, but the lion should be tamed later this year).