April 2, 2020 – Bank of America’s U.S. Economics Team revised their economic forecast this morning, and now thinks the U.S. economy will shrink 30% (on an annualized basis, translating to a 8.5% decline quarter-to-quarter) in Q2, with cumulative decline in GDP of 10.4% for the year.

The report entitled “This Recession Takes The Crown”, indicated that based on the bank’s proprietary data, there was a sharp drop in spending on travel in early March, which spread quickly to recreational services (museums, theaters) and restaurants by mid-March.

If the bank’s projection comes to pass, this level of decline will be the deepest recession on record and nearly five times more severe than the post-war average.

Bank of America anticipates consumer spending to turn positive in Q3 but broader economic output will still experienced negative growth due to weak business sentiments and real estate investment.

On the labor front, 16-20 million of jobs could be lost, peaking at 15.6% unemployment.

On the Federal front, the bank expects an additional stimulus program to the tune of $2-2.5 trillion, bringing the total Washington assistance (not including Federal Reserve programs) to up to $5 trillion or 25% of U.S. GDP.

Contact Karen Bigelow at KBigelow@buymuni.com.