Forecasts from big bank economists and commercial real estate
companies are using descriptors such as “market destruction” and “massive
contraction” to describe second-quarter (Q2) economic conditions.  Between
Wednesday and Friday of last week, analysts revised assumptions downward but also
predicted a rebound in Q3 and Q4 of 2020.

A Wall Street Journal survey of 34 economists on March 18-19
produced a base case Q2 GDP growth of -7%, an optimistic case was -4% and a
pessimistic scenario of -10%. 

Forecasts range widely regarding the depth of declines.
 On Friday, two days after the Journal survey concluded, analysts at
Goldman Sachs Group said they expect the economy to contract 24% in Q2, a rate
nearly five times more severe than the firm’s prior forecast. In contrast,
James Bullard, St. Louis Federal Reserve Bank President, anticipates a -50% GDP
and 30% unemployment as a result of the COVID-19 economic shock.  Other
banks see slightly less unemployment and GDP decline. UBS anticipates 7%
unemployment. JPMorgan Chase expects a GDP of -14% in Q2 while Bank of America predicts

Despite the pessimism for mid-year, most analysts are
positive about the prospect of a rebound in the second half of 2020 and early
2021.  Goldman forecasts GDP to increase 12% in Q3 and 10% in Q4. On
a March 18th call attended by 15,000 people, CBRE analysts noted a relatively
fast bounce back of the Chinese economy as the worst of the coronavirus effects
waned. Hard hit retail, hotels and e-commerce were 80-100% operational,
reversing weeks of steep decline. The China data and tailwinds from fiscal
stimulus led to a predicted recovery chart that may look like the Nike

Among other factors, these forecasts depend on COVID-19
cases in America peaking between May and August. They also hinge on the
effectiveness of fiscal and monetary policy changes.  Last week’s optimism
that Congress was set to act with speed on a $2 trillion stimulus package waned
over the weekend. Delays in the federal government’s monetary and policy
response are contributing to concerns about irreversible layoffs and credit
market consequences. Components of the stimulus apparently include
immediate cash infusions for households, capital relief for tenants and
building owners, mortgage amortization accelerations and insurance changes as
well as Monday morning’s massive quantitative easing by the Federal