US recession coronavirus New York

  • Credit Suisse expects that US gross domestic product will fall 33.5% in the second quarter amid the coronavirus pandemic, according to a Monday note. 
  • The US economy is on track for its worst quarter on record going back to 1945. 
  • Still, the bank expects the economy to bounce back in a “soft-v” shape in the second half of the year, according to the note. 
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Credit Suisse is forecasting a record drop in US gross domestic product this quarter as the coronavirus pandemic continues to slam the economy. 

The bank expects second quarter GDP to contract by 33.5%, according to a Monday note. That means the period from April 1 to June 30 is shaping up to be the worst quarter on record going back to 1945, analysts led by Jonathan Golub wrote.

It shows the stark effect the coronavirus pandemic is having on the US economy. In the financial crisis, the worst quarter of 2008 suffered only an 8.4% GDP slump, according to Credit Suisse. Coronavirus is also outpacing the previous record — a 10% slump in the first quarter of 1958, amid the Eisenhower recession. 

On a calendar-year basis, 2020 GDP is expected to decline 5.3%, outpacing the 2.8% slump in 2008 amid the global financial crisis. 

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The bank’s dismal forecast for the second quarter comes amid a slew of negative outlooks. Most banks and economists expect that the US will fall into a recession or is already in one amid the coronavirus crisis, which has greatly slowed consumer and business activity.

Still, Credit Suisse expects the economy to come back in a “soft-v” shape in the third quarter of the year once the coronavirus pandemic has subsided. The bank forecasts that GDP will spike to 19% in the third quarter and be 11% in the fourth quarter, a solid second half of the year. 

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