This pandemic has put the US economy in the ICU unit. It’s worse than the eurozone. Worse than China’s. Nearly all of it was self-inflicted.
Barclays Capital updated their global growth forecasts on Friday and the US got hammered most, forbes.com wrote.
In a subheading titled ‘US Activity Falls Off A Cliff’, Barclays pointed out that US GDP will be worse now than the entire eurozone, forbes.com reported.
For the year, US economic output could contract by 6.4 percent while the eurozone economies contract by 5.5 percent.
The US contraction is due primarily to an expected two month long shutdown of the economy, over 22 million people laid off, and untold numbers more who were forced into pay cuts and lost bonuses. Within the Americas, only Peru’s economy performs worse, down 6.6 percent by Barclays’ estimate.
March retail sales, released last week, showed the consumer demand destruction beginning towards the end of the first quarter. Overall sales were down 8.7 percent, with non-essential businesses such as autos, furniture, clothing, recreational goods, and restaurants hit particularly hard and declining at a record pace.
The lockdowns were just getting started in most of the country then. April and May promise to be even worse.
On the production side, March industrial production declined more than expected, showing that economic weakness is not just in the travel, tourism and hospitality industry.
Industrial production slid 5.4 percent on a monthly basis and while that might not look like a big stop, it is the biggest decline since 1945 and 1946, when the US was reorienting production to build military equipment.
The March numbers give industrial production weak momentum heading into April, Barclays economist Mike Gapen wrote in a note.