A near total collapse in economic activity
The bank lowered its first-quarter GDP forecast to -3.4% from -2.4% and its second-quarter GDP forecast to -38% from -30%. "We expect the U.S. economic recovery will be more drawn out than previously anticipated, marked by a deeper drop into recession and slower climb out," the economists said. Its third-quarter GDP estimate of 20.7% growth implies that the level of real GDP in the third quarter will recover back only 35% of the lost output in the first half of the year. On an annual average basis, Morgan Stanley expects real GDP contracting 5.5% in 2020, the steepest annual drop in growth since 1946.
This should terrify you.
Morgan Stanley is not an outlier. Goldman Sachs forecast a second-quarter GDP of -34%.
For the full year, Goldman forecasts a 6.2% decline in GDP, which also would be worse than anything the nation has seen going back to the Great Depression.
If you are under the impression that it's just the banks, so we can ignore them, think again. The CBO has similar projections, with an expected decline by more than 7 percent during the second quarter. The decline in the annualized growth rate reported by the Bureau of Economic Analysis would exceed 28 percent.
The US Manufacturing survey data is weeks old, but it still points toward something bad.