Goldman Sachs' economics team has issued a shocking economic forecast, predicting a 24% plunge in second-quarter annualized growth. Yahoo! Finance's Myles Udland and Jennifer Rogers discuss the latest.

Video Transcript

MYLES UDLAND: Let's go now to our Call of the Day, and today, we want to talk about the latest out of Goldman Sachs' economics team and the shocking second quarter growth forecasts that they released today. Coming just five days after Goldman was looking for a 5% drop in second quarter growth, the firm now out with expectations for a 24% drop in annualized growth in the second quarter. Jen Rogers, these are big numbers. And you look at a number like this, a 24% drop in GDP in a single quarter, this is-- this doesn't even show up on the historical charts. There is no number on the y-axis that gives you 24%, and I think it just puts into perspective the magnitude of what we could be looking at in the next couple of months.

JEN ROGERS: It's absolutely staggering when you think about that number. And just looking at the market action right now and a little bit of this leg down that we're seeing, it's this constant we don't know how bad this is, so we can't figure out what to price in here. Goldman trying to give a little bit of color. And frankly, I think it's good. Let's just rip the Band-Aid off, all right? Like, this is how bad it is. It is ugly. Goldman saying 85% declines in sports and entertainment spending, 75% decline in transportation spending, 65% decline in hotel and restaurant.

And I find it interesting where they're pointing they're going to have a lot of declines in terms of the labor because the-- the labor picture of this, I think, is so important right now for us to concentrate on and who is going to be hit. In this note, just saying that disproportionately, it is going to be low-wage workers, and that is something that they need to get their hands around in DC immediately, especially when you look at this anticipated growth pace down 24%.

MYLES UDLAND: Well, you know, you go back several months when we would talk about, you know, when's the next recession, what's going to cause it, are recessions necessary or are they good, and I would always take the side of all recessions are bad because, to that point, the most vulnerable parts of the economy are always the ones that are hit first, regardless of whether the recession grows out of a financial crisis or grows out of a public health shock.

But, you know, looking at this kind of note, I was just talking to-- I was just Slacking with Sam Roe earlier today about, you know, the-- the call from Kolanovic out of JP saying maybe the asymmetric risks are to the upside, and you see the huge downward revisions in GDP. And obviously, the-- the number of coronavirus cases, number of deaths, all that stuff is going to go up sharply here in the US. But I think you look at where Wall Street is at psychologically, and-- and it feels like the panic phase for TheStreet is closer to ending than beginning, even if the public health part of it is a little bit behind that.

JEN ROGERS: Well, when you look at a-- a number like down 24%, yeah, you certainly hope so. I wish we could go back a few weeks and just talk about the next recession. Because now-- we had MUFG Chris Rupkey, I asked him about chances for a depression, and it isn't the last time that I use the word "depression" this week. Let's hope that these numbers from Goldman, as you said, they've already adjusted them pretty quickly. It would be nice to be able to-- I can't believe I'm saying that-- it would be nice to be able to stand pat down 24%.

MYLES UDLAND: Yeah, well, I think there's going to be a race to some kind of a bottom. Obviously, July, you know, the last week of July is going to come, and we're going to get the second quarter GDP print. But it-- it feels like when you quintuple your estimate for growth inside of five days. It's-- you can't quintuple that again. There's not going to be no growth. So it does seem-- seem logically like this would have to be something nearing a bottom in-- in that sort of estimate.

But of course, we'll see what the next week of economic forecasts hold. All right, coming up on the other side of this break, we're going to talk to Chris Konstantinos about where he sees this market headed, what he makes of the last couple of weeks of selling, and where we can maybe talk ourselves into this thing leveling off.