Since issuing our last forecast on 20 March we have materially marked down our near-term GDP forecast. We now estimate that GDP declined at a 3.5% annual rate in the first quarter and we look for a 26.5% annualized decline in the second. The markdown reflects inclusion of new high-frequency data and reports on developments in industries directly affected by social distancing, as well as new judgment on how efforts to slow the spread of coronavirus disease 2019 (COVID-19) will permeate the economy. The last two weeks' startling reports on initial claims and our own service-sector purchasing managers' index (PMI) support our forecast of a sharp contraction. We do not expect GDP growth to turn positive until the fourth quarter, reflecting our view that activity will not begin to turn up materially until new US cases of COVID-19 are driven essentially to zero and even then, it may take some time for consumers and business to resume spending and investing in earnest.
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