Goldman Sachs now expects US unemployment to hit 15%
After a dismal winter, China's economy is showing signs of life. But a recovery in Asia won't paper over problems in the United States and Europe as the world sinks into recession. Goldman Sachs has significantly downgraded its outlook for the US economy between April and June. The investment bank now expects an annualized rate of contraction of 34% compared to the previous quarter. The last estimate was an already-shocking 24%.
Goldman revised its forecast because it thinks the US labor market collapse will be even worse than anticipated. It now sees the unemployment rate rising to 15% by the middle of the year, compared to 9% before. The bank has also updated its predictions for an economic rebound between July and September, which it thinks will be stronger than what it had last penciled in. But in the interim, Wall Street is clearly bracing for pain.
China's official manufacturing Purchasing Managers' Index surged from 35.7 in February to 52 in March, surpassing estimates from analysts. Survey data also showed a rebound in other parts of the economy. A reading above 50 indicates growth compared to the previous month. In a new report, Deutsche Bank said it expects GDP in the United States and Europe to take a $2 trillion hit as a result of the pandemic. And that takes into account the unprecedented policy response.
