JPMorgan Chase economists have revised their forecast for US GDP. for the second quarter with a decrease of 40%. Earlier estimates from the largest US bank, they had indicated a 25% decline. [CNBC]
In addition, the economists team has suggested that unemployment will rise to 20% in April. This number would bring job losses to 25 million. The numbers show that the economic decline due to COVID-19 continues.
The complexity of assessing the current economic climate and predicting future impacts remains significant. The team’s report shows that its initial focus on demand led to the previous estimate of 25%.
However, as the team continued to investigate the impact of home accommodation requests, the supply side also became a factor. The reduction in working hours has led to a significant reduction in production and work efficiency.
The previous methods for assessing the market reactions could not provide a vision of the current crisis. Instead, new methods should be evaluated. According to the report:
“For the past few weeks, forecasters have been working in the fog. Economic models that have been trained with post-war data are subject to obvious restrictions. Instead, we have returned to various approaches to the panorama.”
The positive side
Although these statistics seem terrible, the team indicated that the second half of 2020 would begin the recovery process. They forecast GDP growth of 23% and 13% for the third and fourth quarters, respectively.
As the economic shutdown was triggered by widespread closings rather than other market conditions, the team sees a relatively quick recovery. As soon as the orders have been canceled and workers can return to the remaining jobs, the economy can recover. The package of economic stimulus measures can also have a positive impact.
The answer to cryptocurrency
As the general economy has shrunk, cryptocurrency prices have also fallen. Bitcoin prices fell sharply in the first half of March and briefly fell below $ 4,000.
After the first contraction, however, Bitcoin has partially stabilized. Since then, the price has rallied to over $ 6,500 and seems to have found support at that level.
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