America's economy is expected to grow by far less this year than most economists expected just a month or two ago. The global coronavirus outbreak is responsible for the damage.
BMO has cut its second-quarter GDP growth estimate to -2% to account for a hit to the US oil industry and the likelihood that parts of the economy could be shut down to control the outbreak. For the full-year, GDP growth is expected at 1%.
This would be by far, the weakest year for the economy since the great recession," BMO chief economist Michael Gregory said in a note Tuesday.
Before the outbreak, the bank expected the US economy would grow by 1.8% this year.
America's employment rate, which is sitting at a historically low level of 3.5%, is also expected to rise. BMO forecasts 3.9% in the second quarter.
With a downturn in the oil industry because of a price war amid oil-producing countries, and a hit to demand, US inflation will likely also remain sluggish. This will give the Federal Reserve the room to cut rates further, Gregory said.