New forecast showing U.S. economy may crash as much as 38%
- Morgan Stanley lowered its U.S. economic forecasts, saying social distancing measures and closures of nonessential businesses have spread to an increasing number of states.
- The Wall Street firm lowered its first-quarter gross domestic product forecast to -3.4% from -2.4% and its second-quarter GDP forecast to -38% from -30%
- “We expect the U.S. economic recovery will be more drawn-out than previously anticipated, marked by a deeper drop into recession and slower climb out,” the economists said.
- Its third-quarter GDP estimate of 20.7% growth implies that the level of real GDP in the third quarter will recover back only 35% of the lost output in the first half of the year. On an annual average basis, Morgan Stanley expects real GDP contracting 5.5% in 2020, the steepest annual drop in growth since 1946.