The U.S. could already be entering a recession because of the coronavirus pandemic, which has shuttered bars and restaurants and drastically changed American life, according to a Tuesday analysis from S&P Global.
“While economic data for March is just starting to be released, the severity of the blow from the coronavirus leads us to believe that the U.S. is entering recession — if not already in one,” the financial company wrote in a research note Tuesday.
The note said the economy could shrink by 1 percent in the first quarter of 2020, with a huge 6 percent drop possible in the second quarter. Two consecutive quarters of economic contraction meet the technical definition of a recession.
The analysis said the economy could swing back in the second half of the year, but the overall outcome is expected to be flat. Before the outbreak, S&P Global had predicted 1.9 percent growth this year.
Other major institutions are predicting a global recession as well but are not yet calling a recession in the U.S.
If the growth manages to stay positive in the first quarter, the U.S. could avoid the recession label.
“Global recession in 2020 is now our base case,” a Morgan Stanley analysis released Tuesday said, pointing to the virus’s spread in Italy, the U.S. and more broadly in Europe. It expects a 4 percent contraction in the second quarter.
The bank forecasts that with “meaningful” policy responses, new cases of the virus will peak in late April or May.
Goldman Sachs predicted that the global recession would be worse than the ones in 1991 and 2001, but not as bad as the 2008-2009 financial crisis or the deep 1981-1982 recession.
But while its latest predictions expected positive U.S. growth through 2020, the analysis said that forecast could be too sunny.
“The risks even to our new 2020 numbers remain on the downside,” the analysis said, noting that it had not yet “built a full lockdown scenario into our forecasts for the United States and other advanced countries outside Europe.”
Six counties in the Bay Area instituted shelter in place policies on Monday.
An analysis from the Economic Policy Institute estimated that 3 million jobs would disappear by summer.
Former Trump administration economist Kevin Hassett predicted the figure closer to 1 million but said the global recession seemed inevitable.
“The odds of a global recession are close to 100% right now,” he told CNN.