JPMorgan sees US jobless rate at least 10% via early 2021

Bloomberg

Economists at JPMorgan Chase & Co. see the US recovery from the coronavirus pandemic going even more slowly than previously thought, downgrading their forecast for 2021 growth and projecting an unemployment rate of at least 10% through next year’s first quarter.
The lockdowns of state economies to combat the spread of the coronavirus will translate into an unprecedented 40% annualised decline in second-quarter gross domestic product (GDP) and a gradual recovery in the second half of the year, JPMorgan economists led by Michael Feroli said.
But growth through 2021 will be weaker than previously projected, the researchers said, citing a separate JPMorgan report that listed reasons including damaged balance sheets, state and local spending cuts, higher saving rates and the prospect that more temporary layoffs become permanent.
As the economy slowly regains its footing in the second half of the year, Americans who found themselves out of the labour force as businesses shut down over the last two months will once again start looking for work. That means they would be added to the count of the nation’s unemployed until they find a job.
“As the lockdown eases some of these non-participants are likely to emerge from home and become formal jobseekers. This development should slow decline in unemployment rate,” the JPMorgan economists said.
Meantime, a real-time population survey of 1,992 respondents conducted by economics professors Alexander Bick and Adam Blandin in conjunction with Federal Reserve Bank of Dallas showed unemployment jumping to 24.8% in the week of May 10-16, the reference week for government’s April jobs
report due out June 5.