[Discuss Thrower]

https://seekingalpha.com/article/433...line-is-coming

1. Peak loss of output. It's now generally accepted by economists that US GDP will contract by an annualized rate of somewhere between 15% and 25% in the second quarter of 2020 (some economists have estimated that the contraction in 2Q 2020 could be as severe as -50%). This would represent the greatest quarterly contraction in US economic history, by far.

2. Cumulative loss of output. Even though the US economy may resume quarterly sequential economic growth in the third quarter, the US economy will most likely remain in deep contraction mode on a year-over-year basis (i.e. relative to the same period in 2019) for all of 2020. This is due to the fact that social distancing will continue to be practiced (mandated and/or voluntary) – to a lesser or greater degree – for 12-18 months (or until a vaccine and/or cure for COVID-19 is widely available), thereby devastating large parts of the US economy during this time. For example, restaurants, sporting events, air travel, concerts, conventions, shopping malls and tourism will be devastated (relative to 2019 levels) for as long as social distancing is being practiced. In this context, it can be estimated with confidence that the cumulative loss of output associated with the forthcoming recession, relative to the baseline level of output (in this case 2019), will be by far the most severe since the Great Depression. No other recession since 1929 comes even close.

3. Peak unemployment. Peak unemployment is likely to surpass 20% and could be substantially higher. This is a higher rate of peak unemployment than any US economic crisis since the Great Depression.

4. Cumulative loss of hours of production. The cumulative loss of productive labor associated with the forthcoming recession will surpass any such losses since the great depression. No other recession other than the Great Depression produced a loss of labor hours that is even close, by comparison.

5. Massive financial crisis. The forthcoming financial crisis will make the Financial Crisis of 2007-2009 look like child’s play. No financial crisis since the Great Depression will be remotely comparable to the one which will be experienced in the coming months and years. The financial crisis of 2007-2009 – which had been the most severe financial crisis since the Great Depression - was mainly caused by defaults in just one segment of the credit market, namely residential mortgages. The forthcoming financial crisis will involve massive defaults on debt obligations from virtually every single industry in the US economy. Furthermore, massive defaults on commercial leases will have a devastating impact on the highly leveraged real estate sector and the financial entities that finance them. In the course of the forthcoming financial crisis, the common equity shares of many banks and financial companies will become worthless, while virtually all common equity shareholders of financial companies that provide credit will be subject to massive dilution in forthcoming restructurings and recapitalizations.