We try not to change our forecast frequently, but the realities of the COVID-19 outbreak suggest a revision to our outlook. Nearly 10 million U.S. workers applied for unemployment insurance in just two weeks, a flow that is likely to continue. The relaxation of social distancing is at least several weeks away, and will proceed deliberately. Consumers may take time to get back to normal patterns of activity, and some households may suffer lingering financial impairment.

Policy responses have recognized the severity of this occasion, but these take time to reach those affected. Some small businesses remain at risk. All of this adds up to a very disappointing second quarter, with a possible rebound starting in the third quarter. Of course, the timing and magnitude on both sides are dependent on medical outcomes.

We will publish additional updates as warranted.

USEO - April 2020 - Chart 1

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