Pub. 8 2020 Issue 2

14 The Community Banker www.mibonline.org SHORT, SHARP AND SPOTTY: WHAT TO EXPECT FROM THE CORONAVIRUS RECESSION AND HOW COMMUNITY BANKS CAN HELP By Noah Yosif I t ’ s official — the U.S. econo- my is in full-swing recession. While formal confirmation by the National Bureau of Economic Research is always appreciated, the signs were pretty obvious: social distancing grinding business activity to a near halt, skyrocketing weekly unemployment claims at both a state and national level and, of course, market volatility erasing three years ’ worth of gains in a matter of weeks. In fact, the NBER estimates this recession first started in February, making this newly reported contraction four months old. With irrefutable evidence that the United States is in a recession, zealous market watchers are now searching for clues as to its size and scope. At ICBA, we took the liberty of crunching the numbers in search of some answers and our conclusions point to a short, sharp and spotty recession. Figure 1 shows our forecast for economic growth in the near term, indicating a V-shaped trajectory for recovery. While we expect the second quarter GDP to contract by a record margin at 27.3%, we also anticipate a quick recovery that will enable the U.S. economy to expand once again by 2021. These patterns are much different from what we saw in 2008, and in many recent financial crises to date, but for a good reason. This