(WVLT/CBS) — The economic slump that has put millions of Americans out of work could get worse, according to Goldman Sachs.
CBS reports the investment bank predicts that unemployment, which hit nearly 15 percent in April, could go to 25 percent this year. That would equal the jobless rate during the Great Depression. According to its report, more than a third of U.S. workers could be unemployed, counting people too discouraged to search for a job and those who can find only part-time jobs.
“rolonged weakness could cause severe scarring effects such as permanent layoffs and business closures that delay the recovery,” Goldman Sachs economists said.
Goldman Sachs said though it expects economic growth to pick up in the second half of the year, it forecasts that unemployment will remain at 10 percent by the year’s end–matching the high it hit during the Great Recession. “A return to the pre-virus rate is likely years away,” the analysts wrote.
Manufacturing output fell 25% in the first quarter, driven by a near-total shutdown of auto plants, Goldman estimated. Construction spending fell 35%. Consumer spending — which accounts for more than two-thirds of economic activity — fell 20% across a broad range of categories.
CBS reported an April study from the University of Illinois, University of Chicago, the Harvard Business School and the National Bureau of Economic Research found that as many as 100,000 small businesses may have closed permanently.
Meanwhile, 3% of restaurants had closed permanently as of the end of March, according to a survey from the National Restaurant Association. Nationwide, that would mean 3 million food establishments gone.
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