Economists agree: No quick rebound from recession is likely

Devastated by the coronavirus, the US economy is sinking. And the plunge is accelerating.

Now, as some businesses in a few states start to trickle back to work, hopes are beginning to arise that the economy, damaged as it is, might be poised to rebound by the second half of the year. If more employees and consumers were to gradually return to working and spending, the idea goes, the economy might be able to mount a sharp comeback.

Yet most economists have the same response: Keep such expectations in check.

Among their concerns is that the coronavirus could flare up again after the economy is re-opened, forcing reopened businesses to shut down again. Another is that people employees and consumers alike will remain too wary of contracting the coronavirus to return to anything resembling normal economic behaviour. If that were the case, no meaningful economic recovery would likely take hold.

The virus has done a lot of damage to the economy, and there is just so much uncertainty now, said Mark Zandi, chief economist at Moody's Analytics.

The US economy shrank at a 4.8 per cent annual rate in the January-March quarter, the government estimated Wednesday, as the coronavirus pandemic shut down much of the country and began triggering a recession that will end the longest expansion on record.

Yet the drop in the first quarter will be only a precursor of a far grimmer report to come on the current April-June period, with business shutdowns and layoffs striking with devastating force. With much of the economy paralyzed, the Congressional Budget Office has estimated that economic activity will plunge this quarter at a 40% annual rate.

That would be, by a breathtaking margin, the bleakest quarter since such records were first compiled in 1947. It would be four times the size of the worst quarterly contraction on record set in 1958.

The Commerce Department said that the gross domestic product, the total output of goods and services, posted a quarterly drop for the first time in six years. And it was the sharpest fall since the economy shrank at an 8.4% annual rate in the fourth quarter of 2008 in the depths of the Great Recession.

The longest U.S. economic expansion has ended, said Gregory Daco, chief economist at Oxford Economics.

Daco predicted that the recession will cause a drop in output that will be three times the size of the economic decline during the Great Recession, which got that name because it was the worst economic slump since the Great Depression of the 1930s.

Zandi said he thought any prospects for a recovery will hinge on the eventual availability of a coronavirus vaccine. He doesn't expect the economy to regain its footi