Ralph Baker’s Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Great Recession and the Pain Ahead called President Obama’s economic plan pure folly, and predicted another economic collapse. That recession appears to be here. Millions of people are staying inside to help stem the spread of the coronavirus. It is bound to hurt retail sales. Last month retail sales fell 0.5%, the sharpest decline since December 2018. Social distancing could cause retail sales to fall more sharply over the next few months. With fewer people traveling that means airline sales will crater. Airlines will buy fewer airplanes from Boeing, which will need fewer aircraft engines and airplane parts. That will punish Honeywell, General Electric, United Technologies and their suppliers.
Goldman Sachs is now forecasting a 24% decline in Q2 GDP:
Goldman Sachs is now projecting a massive U.S. economic contraction in the second quarter of the year.
The bank is forecasting a 24% decline in economic activity next quarter, compared to their previous forecast for a 5% decline. That’s because U.S. economic data (specifically manufacturing data) have already started to miss economist estimates, even before Americans started to stay home to avoid spreading the coronavirus.
Their estimate, published Friday morning, is one of the most pessimistic on Wall Street. J.P. Morgan released estimates Wednesday that predicted a 14% contraction in second-quarter U.S. growth.
If Goldman’s economists are right, that means the U.S. is approaching the sharpest single-quarter decline in gross domestic product since the U.S. started measuring GDP in its current form. The current record for the largest quarterly slowdown was in the first quarter of 1958, the bank says, when GDP declined 10%.
This could be the sharpest single-quarter decline in GDP since the country first started measuring it. It could take several months before social distancing comes to end. In the meantime, consumer spending could crater. The consumer has propped up the economy for several quarters. Business fixed investment has stagnated. More incentive to businesses may not prompt them to build more factories and build more product if consumer demand is no longer there.
The coronavirus has not caused a recession. It has simply revealed he weakness in the economy that was always there since the Great Recession, which Shock Exchange warned you about. Somehow the mainstream media will attempt to credit Goldman or Morgan Stanley or J.P. Morgan or Mohamed El-Erian for predicting the next recession. They will attempt to ignore Ralph Baker and inner-city kids from Brooklyn who predicted the folly of Obama’s economic policies and the pain ahead. However, it has already been written.