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Key Findings: 2020 GMP and Unemployment Forecast

GMP (Gross Metro Product)

The sum of real metro GMP will fall by 8.8% in 2020, equating to a $1.45 trillion drop in metro economic output, or a loss of $14,700 per metro household.

Losses in GMP will be greater than 10% in 88, or 23%, of all metros; 193 metros, 50.6% of the total, will suffer GMP losses exceeding 8%. And 92%, 352 metros, will see GMP decline by at least 5% for this year.

Unemployment

For the full year, the average unemployment rate will be above 10% in 161 metros, 42% of all. It will be above 8% in 75%, or 284 metros, and above 6% in 96%, or 366 of 381 metro areas.

By the first quarter of next year, 2021, metro job levels will remain 5.2% below that of a year earlier, a loss of seven million jobs. By contrast, during the Great Recession, job losses from 2008 to 2009 were 5.1%. Again, this assumes that that infections do not continue to surge.

Among large metros, Detroit, New York, and Chicago will remain more than 10% below pre- pandemic job levels. Overall, employment in 24 metros will still be down at least 10% in 2021Q1, and 123 will be at least 5% depressed.

38% of the job losses over March and April, and 47% of the cumulative increase in employment over May and June were in leisure and hospitality. That sector is likely to suffer anew as an alarming increase in the number of new infections has forced several states to pause or roll-back steps to ease virus-related restrictions on activities.

Conclusion

The surge in COVID-19 infections and increases in hospitalizations and mortality threaten the nascent recovery in economic activity that began in May, underscoring the existence of extraordinary uncertainty about the course of the pandemic and the economic outlook. The forecast presented here assumes that the pandemic is gradually brought under control in the second half of the year, an outcome that remains in doubt.