• The bank also foresees as many as 20 million jobs could be lost due to the crisis, sending the unemployment rate to a high of 15.6%.
  • "This will be the deepest recession on record, nearly five times more severe than the post-war average," wrote Bank of America economist Michelle Meyer.
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The recession the US is facing triggered by the coronavirus pandemic could be the worst on record, according to Bank of America economists.

On Thursday, a team of economists led by Michelle Meyer slashed the firm's US economic forecasts, citing the coronavirus outbreak. The bank now expects that US gross domestic product will contract for three quarters, with a cumulative decline of 10.4%.

In addition, as many as 20 million jobs could be lost due to the crisis, sending the unemployment rate to a high of 15.6%, according to the Thursday report.

"This will be the deepest recession on record, nearly five times more severe than the post-war average," Meyer wrote.

After assessing consumer and other data over the last two weeks, Bank of America now sees first quarter GDP sinking 7%, and continuing that decline with a 30% drop in the second quarter. It will rebound slightly in the third quarter, but still end up -1%, according to the bank.

"While consumer spending will likely turn positive in 3Q as the economy slowly opens, we expect further contraction in business and residential investment," Meyer wrote. "We also think there will be additional inventory contraction given impaired supply chains and frictions in production."

Bank of America is also expecting deep losses in the job market, sending the unemployment rate rocketing higher. Two weeks ago, 3.28 million Americans filed for unemployment insurance, and last week an additional 6.6 million filed .

Over the course of about two months, total job losses could be between 16 million and 20 million, according to Bank of America.

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"The pain is unlikely to subside quickly as many states have reported major backlogs of applications," Meyer wrote. The staggering job losses could send the unemployment rate as high as 15.6%, much higher than previous downturns, she said.

Both the White House and the Federal Reserve have made sweeping policy changes in order to bolster the US economy amid the coronavirus pandemic. President Trump passed a $2 trillion stimulus bill, and the Fed has gone beyond its 2008 toolkit.

"We think there is more to come," Meyer said. "Given the severity of the downturn, we think more fiscal stimulus will be needed."

More tax rebates, further expansion of unemployment benefits, and more funding for small businesses are "potential possibilities if the depression-like slowdown persists through the summer," she said. Bank of America thinks the total fiscal response from Washington could be $3 trillion and $5 trillion, or between 15% and 25% of GDP, pushing the deficit to unprecedented levels.

She continued: "Beyond that, other stimulative measures such as a payroll tax cut or a major infrastructure bill could be needed to resuscitate the economy."

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