US: Economy will fall into a sharp, albeit short-lived, recession – Wells Fargo

Analysts at Wells Fargo project that the US economy will fall into recession in during the second quarter and they see global real GDP growing “roughly” 1% in 2020.

Key Quotes: 

“Many economies are essentially locking down to combat the spread of the COVID-19 outbreak. Although these steps are necessary from a public health perspective, they likely will have significant economic consequences. We now project that the U.S. economy will fall into a sharp, albeit short-lived, recession in Q2-2020.”

“All economic forecasts are subject to uncertainty. But we want to stress that the economic outlook is more uncertain than usual at present. The path that the U.S. economy takes in coming months will depend in large part on how the COVID-19 outbreak evolves, which is highly uncertain. If American authorities manage to get the outbreak under control in coming weeks, then real GDP may not decline as much as we fear. On the other hand, if the outbreak continues to accelerate well into the second quarter, then the contraction in U.S. real GDP could be even deeper than we currently project.”

“We forecast that global GDP growth will fall to roughly 1% this year. Outside of 2009, when the global economy contracted modestly, our forecast for 2020 would mark the slowest pace for global GDP growth in nearly 40 years.”

“Any meaningful economic stimulus in most major foreign economies will need to come from fiscal authorities rather than central banks. On that score, we will wait and see what steps governments may announce in coming weeks and months.”