The Neyland Report
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The coronavirus is likely tipping the U.S. economy into a recession, with negative GDP growth in 1Q and 2Q. Add the hit the retail industry has taken and a recession seems imminent.

JPMorgan Chase and Wells Fargo, two of the country’s largest banks, reportedly set aside billions for losses on loans to customers who may not be able to repay them. These are pre-emptive moves on the part of the banks and its customers in anticipation of the recession of 2020.

As of April 14, the 189-country International Monetary Fund predicted the worst recession since the Great Depression, much more extreme than the financial fallout of 2008.

As of this reporting, earnings estimates for Q2 and Q3 vary, but trend uniquely downward. Goldman Sachs expects -15 percent Earnings Per Share (EPS) in Q2, and -12 percent in Q3. (EPS is calculated as a company’s profit divided by the outstanding shares of common stock.)

The duration of the recession will first depend critically on the path of the coronavirus. The longer the virus lingers and necessitates social distancing, the longer the bottoming process for the economy will be and the greater the odds of structural damage to the economy. Fortunately, public health experts report that social distancing among U.S. citizens is having a positive effect on defeating the virus.

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