Goldman Sachs issues warning about US unemployment - CNN - 0 views
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The unemployment rate in the United States will peak at 25%, rivaling the worst period of the Great Depression, Goldman Sachs warned on Wednesday.
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The unemployment rate spiked to 14.7% in April as the economy lost more than 20 million jobs during the self-imposed shutdown to fight the coronavirus pandemic.
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Goldman Sachs previously projected the unemployment rate would peak at 15%. The new forecasts are based on government statistics, the first glimpse of the reopening process and new big data sources, the bank said.
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Annual data, which go back to 1929, show that the unemployment rate peaked during the Great Depression at an average of 24.9% in 1933.
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Goldman Sachs warned Wednesday that the real jobless rate will peak at 35%, up from the bank's previous projection for a peak of 29%.
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, told CNN last week that the real jobless rate could hit 25% before "hopefully" falling following a transition period this summer.
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Dr. Anthony Fauci, the nation's top infectious disease expert, said Tuesday that the "consequences could be really serious" if states reopen ahead of the guidelines issued by the White House.
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Goldman also upgraded its GDP forecasts, predicting a "somewhat more V-shaped path" as states relax lockdown orders. The bank now expects rapid annualized growth of 29% in the third quarter, up from 19% previously.
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And Goldman noted several "serious health risks": "insufficient testing and contact tracing" in some states, reopening high-risk sectors and limited evidence of how effective measures like social distancing and will be.
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"Prolonged weakness could cause severe scarring effects such as permanent layoffs and business closures that delay the recovery," Goldman Sachs economists wrote.