Vanguard Expert Perspective - A Sharp Contraction, Then an Upswing

Chief Economist Joe Davis provides the latest Vanguard Expert Perspective, "A Sharp Contraction, Then an Upswing."

Summary

Vanguard expects real GDP to contract in the coming quarter by nearly 17% on an annualized basis, marking the deepest quarterly decline since at least the 1950s.  However, Vanuard expects this could also turn out to be among the shortest recessions in our history, assume that the need to significantly restrain activity, such as the closure of non-essential businesses, will dissipate by late in the second quarter.

Under such a scenario, and with aggressive fiscal and monetary policy measures, they would foresee a rebound in growth in the third quarter to mark the end of a sharp yet short recession.

A ray of light is that, looking over the next ten years, Vanguard's long-term stock market outlook is starting to improve, with expected 10-year returns trending up significantly.

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