Ask any economist if you can shut down the country during a pandemic and still manage to avoid an economic contraction.
The answer is no. The American economy depends on consumer spending, which accounts for about 70% of GDP. While panicked consumers have been stocking up on toilet paper and counter wipes, spending has plummeted at other places like retail malls, restaurants and anything related to travel.
GDP growth likely will be zero in the current quarter and contract 5% in the second quarter, Goldman Sachs economists said on Sunday. That probably will be followed by a jump of 3% in the third quarter and 4% in the final three months of the year as pent-up demand drives business activity, the forecast said.
“The uncertainty around all of these numbers is much greater than normal,” said the group, led by Goldman’s Chief Economist Jan Hatzius.
But that doesn’t mean the housing and mortgage industries will suffer the same fate as the travel industry.
The most important thing to keep in mind when evaluating how those sectors might fare in a recession is: Don’t go by what happened last time.