Bank of America's chief economist warned clients Thursday that the U.S. is now in 'a recession,' according to a media report.
The CNBC network said Michelle Meyer wrote in a letter that the U.S. economy is in a 'deep plunge' amid the coronavirus outbreak that has killed 150 people across the country.
'We are officially declaring that the economy has fallen into a recession ... joining the rest of the world, and it is a deep plunge,' the letter read. 'Jobs will be lost, wealth will be destroyed and confidence depressed.'
The bank expects the economy to shrink 12% in the second quarter, while GDP for the full year will contract 0.8%. It expects the unemployment rate to nearly double, with 1 million jobs lost each month in the quarter with a total of 3.5 million unemployed.
The decline is 'sever,' she said, but will be 'fairly short-lived.'
Meyer opined that 'salvation' of economic slowdown will come from aggressive action.
'When it comes to the policy response, there should be no upper bound for the size of the stimulus, in our view,' she wrote.
In the past few days, U.S. markets have seen record stock losses for the first time since 2017. The swing in markets is not only related to the virus but also an ongoing dispute between Russia and Saudi Arabia about oil prices and the rate of production.
Meyer’s reported remarks came days after U.S. President Donald Trump admitted the country 'maybe' headed toward a recession.
'I think there's a tremendous pent-up demand both in terms of the stock market and in terms of the economy,' Trump said. 'Once this goes away, once it goes through and we’re done with it, I think you’re going to see a tremendous surge.'
The virus known as COVID-19 emerged in Wuhan, China, last December, and has since spread to at least 159 countries and territories, according to Johns Hopkins University's Coronavirus Research Center in the U.S.
More than 222,000 cases have been confirmed worldwide, with 9,000 deaths.
In the U.S., the disease has killed 150, with more than 9,400 cases confirmed.
The World Health Organization declared the outbreak pandemic.
The virus is not fatal in all cases and a vast majority of patients fully recover.
By Beyza Binnur Donmez