BoA Chief U.S. Economist Michelle Meyer shared the news on Thursday (March 19).
“We are officially declaring that the economy has fallen into a recession … joining the rest of the world, and it is a deep plunge,” Meyer said. “Jobs will be lost, wealth will be destroyed and confidence depressed.”
BoA predicts that the economy will collapse in Q2, hitting 12 percent, and that the GDP for the year will shrink by 0.8 percent. The bank cited the labor market as the parameter to measure the “magnitude of the economic shock.”
Unemployment is expected to nearly double, the bank said, with one million jobs projected to be lost each month in Q2, reaching a total of 3.5 million.
The coronavirus has already ravaged global markets. The S&P 500 and Dow Jones Industrial Average are in bear market range, at about 30 percent of record-high levels from February.
Things will continue to get worse, Meyer said. April will be a struggle and then a “very slow return to growth thereafter, with the economy feeling somewhat more normal by July. Although the decline is severe, we believe it will be fairly short-lived,” she noted.
The only thing that will bring “salvation,” Meyer said, is action from the government.
“When it comes to the policy response, there should be no upper bound for the size of stimulus, in our view,” she said.
Other banks have also shared dire views of the economy, with Morgan Stanley claiming that recession this year is its “base case.” Jeffrey Gundlach of DoubleLine Capital said a recession is a 90 percent probability.