GDP to plunge in Q2, but hit can still be contained

The rapid escalation of measures to contain the coronavirus outbreak suggests that the economic damage will be even larger than we anticipated only a few days ago, and we are now pencilling in a 10% annualised decline in GDP in the second quarter. For now we expect activity to begin to rebound over the second half of the year, but that will depend on the virus being brought under control over the next few months and on Congress stepping up to the plate with a substantial fiscal response.