ACEC Macro-Economic Update for the Week Ending March 28, 2020

Coronavirus / Market Forecast

March 27, 2020

ACEC Macro-Economic Update for the Week Ending March 28, 2020

By Erin McLaughlin

Initial Unemployment Claims Break Records:

Breaking the longest streak of U.S. job growth ever recorded, at 113-months, March 2020 brought record unemployment due to the COVID-19 pandemic. A record 3.28 million workers made initial claims for unemployment for the week ending March 21, 2020, according to the Department of Labor. This is up 3 million from the previous week and is 17 times higher than the previous record one-week jump, according to the Wall Street Journal. More than 10 states reported over 100,000 claims, including Pennsylvania, Ohio and California. The unemployment rate is expected to continue moving higher as business interruptions result in more layoffs.

We May Be In a Recession, says Fed Chair Powell:

In a rare live interview on NBC’s TODAY show on Thursday, March 26, 2020, Federal Reserve Chair Jerome Powell said, “We may well be in a recession.” Powell did note the difference between the current crisis and a normal recession, given there is nothing fundamentally wrong with the economy and the banking systems. In recent weeks the Fed has taken a series of emergency actions to support the economy during the COVID-19 pandemic, including lowering interest rates to near-zero. “The virus is going to dictate the timetable,” Powell said on TODAY. “The sooner we get through this period and get the virus under control, the sooner the recovery can come.” Typically, a recession is defined as two consecutive quarters of economic decline.

Forecasters Revise 2020 Estimates, Predict Deep Recession:

Economic forecasters are revising 2020 outlooks and predicting zero growth this year. Oxford Economics’ expects U.S. GDP to shrink by 2.6% this year, and for global growth to be at zero in its World Economic Prospects March 2020 – 2nd Update. The most significant impact is expected to be in the second quarter of 2020, with contraction expected at a  faster pace than during the global financial crisis, resulting in 2020 being the second-weakest year for the global economy in almost 50 years (with 2009 being the worst). There is considerable uncertainty but Oxford Economics said although deep, the recession is not expected to be long, “the bounce back in activity will be very strong once social distancing measures are relaxed, and monetary and fiscal stimulus combine with a resumption in discretionary spending.”

Erin McLaughlin is ACEC Vice President Private Market Resources.

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