Goldman Sachs has a devastating revision for its GDP growth predictions

[Recursion]

https://theweek.com/speedreads/903646/goldman-sachs-devastating-revision-gdp-growth-predictions

In a Friday research note, the bank projected a 24 percent drop in the U.S. GDP in the second quarter — a stark revision from its prediction of a five percent drop earlier this week. Goldman Sachs does see a slight rebound in Q3 and Q4 of 12 percent and 10 percent, respectively, but that still leaves the GDP down 3.8 percent at the end of the year.

Goldman Sachs formulated its prediction by looking at past unemployment rates, the effects of Hurricane Katrina, and "job losses by sector and occupation." And it all forecasts a far more economically brutal future than the one the bank saw just a few days ago.

Holy crap. That's insane.

[honest.abe]

1. That sounds like depression level numbers.

I guess the bright spot is that its relatively short term and we should be able to recover back to "normal" levels by sometime next year. As long as things dont get much worse.

[Recursion]

4. Depending on how many small businesses can open back up

It's going to be a long slog if most of the mom and pops just evaporate.

[uponit7771]

6. That's if we shelter in place across the whole country starting April ... Trump won't do that

[unblock]

7. It is on a par with the great contraction, but that continued for 4 solid years

Us gdp roughly was cut in half over for 1929-1933.

Down 24% annualized ("only" down 6% actually in q2) is certainly a depression-era rate, but down 3.8% over the course of a year is nothing like 1929-1933.

I agree with gs that we'll have a robust recovery on the other side of this, but I think q2 might be optimistic.

Q2 is when a wave of bankruptcies will hit, which will ripple through the global economy, and will hit the u.s. economy hardest because our government will do the least and the least effective things to mitigate the problem.

So a bounce-back at a 12% annualized rate seems rather starry-eyed to me.

[Recursion]

9. 12% annual growth requires developing-world conditions in the labor market

I don't like to think about what that would mean

[unblock]

10. lots of businesses will simply reopen, mothballed plants will come back online.

but yeah, this is an opportunity for businesses to replace higher earners with more inexperienced people at lower wages -- even lower than before as workers are desperate to get any job.

[empedocles]

2. More immediately, looks like a tough week a-coming

[Squinch]

3. Down 3.8 percent at the end of the year is better than I ever expected...

[duforsure]

5. That same reporter that trump attacked

Should ask him if he thinks we'll be in a depression soon. Then ask does he think by inaction if he's responsible for more people dying from this virus. They need to keep confronting him with the truth, and not back down.

[NoMoreRepugs]

8. Awfully optimistic numbers starting in June.

Goldman does realize DUMP is at the helm don’t they??

Our woefully inadequate response to the seriousness of this pandemic coupled with the utter stupidity of the Deplorables is to me a toxic soup. With no vaccine and a second wave next winter seems to me GS is tamping down the forecast.

[unblock]

11. i think it's the timing that's optimistic, not the numbers.

plenty of businesses will reopen as soon as there's a green light for it. even if only at 60% capacity, this would still be huge growth compared to the virtual shutdown we're going through now.

i just think don't think the green light will come until september or october at best. personally, i'll be minimizing my exposure risk until we're within hospital capacity *and* we have reasonable (safe and effective) treatment, something better than just hoping a ventilator is enough.

this is not a virus i want to get, even if i'm not in a majorly high risk category. not keen on experiencing constant near-drowning, and not keen on getting permanent lung damage even if i survive.