US economy could shrink 14% next quarter, says JP Morgan

As the coronavirus epidemic continues to shake the pillars of the global economy, an economist from JP Morgan feels that the US GDP could drop 14 percent in the next quarter.

The Bank's US Chief Economist Michael Feroli said, " A drop of that size would be steeper than in the fourth quarter of 2008 - the worst of the Great Recession - when the economy shrank 8.4 percent."

To ease the pain, the Federal Reserve will continue to find “creative” ways to support the economy and that the Trump administration and Congress deliver $1 trillion in fiscal support, added Feroli.

The Bank is of the view that the US economy will shrink 1.5 percent for the full year, and unemployment, now at a 50-year low of 3.5 percent will rise to 6.25 percent by the middle of the year.

Along with JP Morgan, other analysts are also forecasting downturns across the globe, like Morgan Stanley in its recent report warned of a global recession in the first half of 2020. The foreign brokerage said that this one will be worse than the global recession in 2001.

Mirroring the same belief, IHS Markit also said that the US, Europe and Japan are heading for a recession. US economy will shrink by 0.2 percent, it added.