Issue link: http://palletcentral.uberflip.com/i/1266845
PalletCentral • May-June 2020 13 Unlike the Great Depression of the 1930's, this decline in economic activity and the surge in unemployment happened in the matter of two months, not years. in the future. Major economic forecasting groups are forecasting a major drop in GDP during the second quarter – falling at a 25-40 percent rate. Industrial production has dropped at an even faster rate, especially for autos and airplanes. Using the April numbers, Industrial Production will decline by at an annual rate of 60 percent in the second quarter. This would mean a year over decline of 5 percent in GDP, but a whopping 13 percent decline in manufacturing output. The relationship between GDP and IP with an estimate for 2020 is illustrated in the chart on page 14. GDP vs. IP: The other disturbing news has been the sharp rise in unemployment. After sitting below 4 percent early in 2020, unemployment is likely to push above 20 percent in June. This will have a chilling affect on consumer spending and confidence. Hardest hit are those workers that cannot work at home or do not have a college degree. Crystal Ball is Foggy Will the economy recover? How fast? Will it be sustained? These questions are crucial to many of the current business decisions regarding both employment levels and overall operations. Unfortunately, any prediction right now is difficult given the variety of uncertainties. Policymakers in Washington, D.C. and at the Federal Reserve have responded quickly and need to be commended. Their actions to date have helped to slow the rate of descent, but may still not be enough to sustain a recovery. The Federal Reserve has made it clear it will take further action if necessary. At this time, it is not clear if another spending bill will pass in the Congress. Recent actions by the various States to ease restrictions will be helpful, but in most States there are still constraints on how businesses can operate. These constraints, such as keeping operations at 50 percent of capacity to insure social distancing, WATERS