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JPMorgan's New York headquarters. Photo: Erik McGregor/LightRocket via Getty Images

JPMorgan says the economy will shrink by an annualized 1% next quarter, adding to a growing number of firms trimming estimates as the coronavirus rages.

Why it matters: It's the first major Wall Street bank that expects the economy will contract again as a result of the pandemic.

What they're saying: “This winter will be grim, and we believe the economy will contract again in 1Q,” JPMorgan economists wrote.

  • The economy "now faces the headwind of increasing restrictions on activity. The holiday season — from Thanksgiving through New Year’s — threatens a further increase in cases," they said.
  • JPMorgan says economic growth in the the second and third quarters of 2021 will be an annualized 4.5% and 6.5% respectively.
  • This quarter, it expects the economy to grow 2.8% on an annulled basis.

The big picture: Others on Wall Street are ratcheting down estimates for economic growth, in the wake of the coronavirus wave and tightened restrictions.

Economists at Goldman Sachs downgraded forecasts for Q4 and Q1 2021 to an annualized 3.5% and 1.0%, respectively, from 4.5% and 3.5%. They cited the "rapid and broad-based resurgence of the coronavirus."

  • But it upped growth estimates for later next year, saying "the larger drag in the winter should imply an even larger reaccelerating on the back of mass immunization."

Barclays says it expects economic growth to be flat in Q1 2021, vs. its previous expectation of 3% annualized growth, as restriction measures "weigh on service activity in the coming months."

  • It still expects the economy will grow at a 5% annualized pace this quarter.

Go deeper

Dion Rabouin, author of Markets
Updated Dec 3, 2020 - Economy & Business

Our make-believe economy is here to stay

Illustration: Eniola Odetunde/Axios

The Federal Reserve and global central banks are remaking the world's economy in an effort to save it, but have created something of a monster.

Why it matters: The Fed-driven economy relies on the creation of trillions of dollars — literally out of thin air — that are used to purchase bonds and push money into a pandemic-ravaged economy that has long been dependent on free cash and is only growing more addicted.

Updated 5 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Eniola Odetunde/Axios

  1. Health: Most vulnerable Americans aren't getting enough vaccine information — Fauci says Trump administration's lack of facts on COVID "very likely" cost lives.
  2. Politics: Biden unveils "wartime" COVID strategyBiden's COVID-19 bubble.
  3. Vaccine: Florida requiring proof of residency to get vaccine — CDC extends interval between vaccine doses for exceptional cases.
  4. World: Hong Kong to put tens of thousands on lockdown as cases surge.
  5. Sports: 2021 Tokyo Olympics hang in the balance.
  6. 🎧 Podcast: Carbon Health's CEO on unsticking the vaccine bottleneck.

Trump impeachment trial to start week of Feb. 8, Schumer says

Senate Majority Leader Chuck Schumer. Photo: The Washington Post via Getty

The Senate will begin former President Trump's impeachment trial the week of Feb. 8, Majority Leader Chuck Schumer announced Friday on the Senate floor.

The state of play: Schumer announced the schedule after reaching an agreement with Republicans. The House will transmit the article of impeachment against the former president late Monday.