‘I think…through the end of next year we’re going to be working through this global recession.’
Brace for a long, hard road to recovery from the economic collapse caused by the COVID-19 pandemic, says Morgan Stanley CEO James Gorman, in a Thursday morning interview on CNBC after the bank reported first-quarter results.
“Listen, we all love to wish and to hope. I wish, I hope for a V. Do expect a V? No, I don’t,” he told the business network, referring to expectations by strategists and economists for various types of charted economic rebounds from the forced business closures that have resulted in 22 million job losses over the past month.
A so-called V-shaped recovery represents an economic downturn that is sudden and sharp but relatively brief, while a U-shaped recovery, represents a more prolonged period of weakness for the economy.
Gorman is betting on the latter outcome or worse.
“You can’t have this type of dislocation and expect people to bounce immediately,” he said.
“This is not going to turn on a dime. We’re not going to get to June 1, or whatever, and suddenly everybody’s back on the subways, and back on the busses. It’s going to take time.” the investment bank MS, -0.13% CEO said.
His comments come as President Donald Trump was planning to outline on Thursday guidelines for opening up the country in a bid to limit the mounting economic fallout from the coronavirus outbreak, the Wall Street Journal reports. Trump has expressed a hope of doing so by next month.
Business leaders, however, have said that restarting the economy can’t been done effectively without a proper testing protocol, to determine who is infected with the deadly pathogen that was first identified in Wuhan, China, in December but has now infected more than 2 million people and claimed about 140,000 lives world-wide, according to data compiled by Johns Hopkins University.
The stock market has been battered by the pandemic but the Dow Jones Industrial Average DJIA, -0.35%, the S&P 500 index SPX, 0.14% and the Nasdaq Composite Index COMP, 0.87% have gained considerably off late-March lows on hope that the debilitating shutdowns and stay-at-home restrictions can be lifted soon.
“To get everybody feeling like the world is stable again, that’s going to take months, that’s not going to take days,” Gorman told CNBC. “So your best case is some sort of U recovery; and I think you know, if I were a betting man, it’s somewhere between a U and I guess an L,” he said, referring to where the downturn is sharp and lasts for a considerable period.
“I think you know through the end of next year we’re going to be working through this global recession,” he said.
Originally Published on MarketWatch
