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April 21, 2020

Economic outlook: Warning of double-digit US recession with rebound in Q1 2021

By Paul Dennis

21 April

JP Morgan warned of a deep recession for the US economy followed by a rebound in Q1 2021.

In the bank’s latest economic update Dr David Kelly said: “The shape of the recession and subsequent recovery is likely to be a fall, a stall and a surge, with 1Q slightly negative, 2Q sharply negative, a stall into year-end and a rebound in 2021 once a vaccine is developed and released for Covid-19.”

Chief economic adviser for Allianz, Mohamed El-Erian, has suggested there could be a double-digit decline in the US economy this year – a steeper drop than most other economists.

He told CNN that economic growth for the US could be negative ten to 14% this year: “The benefits you would expect normally, lower oil price means more dollars in consumers’ pockets, even that doesn’t work in this economy. So I’m a little bit more worried than what the consensus of economists out there is right now.”

McKinsey has revealed the results of its latest global survey of the economy based on responses from leading executives around the world: “At least six in ten believe that conditions in their home economies and in the global economy will worsen in the coming months.

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“At the company level, prospects are especially grim. Respondents are nearly twice as likely as they were one month ago to say that the profits of their companies will decrease in the next few months; at 61 percent, that is the largest share to report a negative outlook on profits since we began asking the question, in the wake of the 2008 financial crisis.”

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