Goldman Sachs: Unemployment to hit 15 percent, quarterly GDP to fall 34 percent amid coronavirus outbreak

Unemployment will shoot up to 15 percent during the second quarter of the year, while gross domestic product (GDP) will fall at an annualized rate of 34 percent as the coronavirus pandemic ripples through the U.S. economy, according to forecasts Goldman Sachs released Tuesday.

The new outlook shows a deeper recession than an analysis from the investment bank last week, which predicted 9 percent unemployment and an economic trough showing a 24 percent decline.

Goldman Sachs is still predicting a "V-shape" recovery, however, meaning the steep drop-off will lead to a bigger bounce of 19 percent in the third quarter.

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"Our estimates imply that a bit more than half of the near-term output decline is made up by yearend and that real GDP falls 6.2% in 2020 on an annual-average basis (vs. 3.7% in our previous forecast)," the forecast said.

Data that began trickling in last week, showing a record-shattering 3.3 million initial jobless claims, nearly five times the highest on record, contributed to the gloomier outlook.

"This not only means deeper negatives in the very near term but also raises the specter of more adverse second-round effects on income and spending a bit further down the road," the Goldman Sachs analysis noted.

But it also said the $2.2 trillion economic relief package Congress passed last week was more robust than expected, and another bill to deal with states' finances was likely.

"Both monetary and fiscal policy are easing dramatically further, which will tend to contain these second-round effects and add to growth down the road," it said.