Investment banks currently have a vested interest in overstating the potential financial ramifications of the coronavirus, as investors prefer to know the worst likely outcome of a crisis now and overperform expectations later. By contrast, the modeling of the nonpartisan Congressional Budget Office relies on laws as written and typically conservative modeling. For instance, the CBO, as usual, assumes that Congress won’t pass a myriad of more discretionary spending packages and that social distancing declines by 75% during the second half of this year, a highly optimistic hope given the odds of a second surge in the pandemic once cold weather returns.
And even so, the picture the CBO paints is about as bad as the forecasts of Goldman Sachs and JP Morgan.
