The massive declines in retail sales and industrial production last month make it clear that the slump in activity, which only began in mid-March, was unprecedented in terms of both its speed and its severity. We now calculate that first-quarter GDP fell by 3.5% at an annualised pace, whereas we had previously expected no change. The continuing tsunami of initial jobless claims indicates that employment has been hit even harder than activity. We expect that the unemployment rate will climb to between 15% and 20% in April, with a further increase in May possible too.
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