Feroli added that he thought activity could begin to ramp up slowly starting in June, “but not quite to where it was before. We do see growth down for the year by 7 percent.”
This suggests Trump is not likely to get his wish, issued on Twitter on April 8, that once he enters the relaunch codes, all damage from the coronavirus will suddenly evaporate and the economy will rock once more.
“Once we OPEN UP OUR GREAT COUNTRY, and it will be sooner rather than later, the horror of the Invisible Enemy, except for those that sadly lost a family member or friend, must be quickly forgotten,” he wrote. “Our Economy will BOOM, perhaps like never before!!!”
That is certainly not the message coming from most economists or corporate executives.
Some of America’s biggest companies are starting to talk about the long-term hit from the coronavirus on quarterly earnings calls this week. And a lot of the bleak talk makes clear Trump’s hopes that he can just flip the “ON” switch are unfounded.
As the coronavirus shutdown continues to hammer economic activity and sparks tens of millions of job losses, JPMorgan Chase on Tuesday said it set aside a stunning $6.8 billion worth of reserves to insulate itself from loan defaults stemming from the crisis. That figured helped drive down the giant bank’s profits by 69 percent.
“I think companies are very rationally getting their liquidity in order ahead of what could be a significant downturn,“ JPMorgan Chief Executive Jamie Dimon said on the bank’s earnings call. He also cautioned about a quick reopening. “In some ways, the sooner the better, but it has to be safe for everybody,” he said.
Wells Fargo on Tuesday set aside $4 billion for potential losses stemming from the pandemic, driving net income down nearly 90 percent. “Much of the economy is essentially closed,” CEO Charles Scharf said on the bank’s earnings call. “And while there is hope that this is time-bound by shelter-in-place orders, we don’t know what the time frame is or how quickly the economy will recover when these orders are lifted. What we do know is the contraction is real.”
Fortune 100 member Johnson & Johnson on Tuesday slashed its 2020 earnings guidance and said the numbers could change again depending on a multitude of unknowns about how the economy responds in the coming months.
“There is significant uncertainty about the duration and contemplated impact of the Covid-19 pandemic,” Christopher DelOrefice, vice president of investor relations for J&J, said on the conglomerate’s earnings call. “This means that results could change at any time.”
Trump will likely be confronted by a historic loss of 25 million or more jobs, according to economists’ estimates, driven by the economic shutdowns and a jobless rate that could soar close to 20 percent or more. That 25 million number would eclipse the 22 million jobs created since the Great Recession ended a decade ago.
Some portion of this number represents furloughed employees likely to be brought back once the economy begins to grow again. And some percentage of those laid off will also be rehired.