The early hard data for March confirmed an unprecedented hit to economic activity from the coronavirus pandemic, with retail sales seeing the sharpest monthly fall in the survey’s 30-year history and manufacturing output experiencing its biggest decline since 1946. This suggests that GDP had already started to contract in the first quarter, falling by 3.5% annualised. And with social distancing measures only becoming widespread in the second half of March, activity is likely to fall even more sharply in April. While the levelling off in new COVID-19 cases has raised hopes that the US outbreak is being brought under control, it will be at least several weeks before lockdown measures are lifted and even longer before consumers feel safe returning to public spaces. The upshot is that we still expect GDP to plunge by 40% annualised in the second quarter and to experience only a partial recovery over the second half of the year.
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