JPMorgan economists issued an even more dire forecast, now foreseeing a 40% decline in the nation's gross domestic product for the second quarter and a surge in April's unemployment rate to 20% with 25 million jobs lost.
In an earlier forecast, they said second-quarter GDP would be down 25%.
The economists, however, continue to see a second-half recovery, based on the assumption that disruptions from the pandemic fade by June. They note that the number of people seeking unemployment benefits has totaled 16.8 million in just three weeks.
"With these data in hand we think the April jobs report could indicate about 25 million jobs lost since the March survey week, and an unemployment rate around 20%," they wrote, "Given the expected hit to hours worked this quarter we now look for -40.0% annualized real GDP growth in 2Q, down from -25.0% previously."
They expect the third quarter to rebound with growth of 23%, and a fourth-quarter increase of 13%. They forecast a 10% decline in the first quarter. The economists said they will finalize their employment forecast for April in coming weeks.
In general, economists have had a difficult time measuring the impact of the virus shutdowns and many have been revising their forecasts, with a number of firms now seeing hits of more than 30% in the second quarter, historical levels that have no modern precedent.
"Over the last few weeks forecasters have been operating in a fog. Economic models that have been trained on post-war data face obvious limitations. In their place we have reverted to differing ways to address the outlook," they wrote.
The JPMorgan economists said they initially considered the impact on demand, looking at the type of spending cuts that would come as social distancing was expanded and increased in duration. They said they later looked at the supply side impact, as stay-at-home orders increased and limited the quality and effectiveness of labor as a factor of production.
"The long-run destruction of the level of output is difficult to quantify, but likely quite large," they wrote.
The economists issued the latest forecast after Thursday's jobless claims showed another jump of 6.6 million workers filing for jobless claims and a sharp decline in hours worked.