With market volatility like we have seen over the past two weeks, it’s understandable why people are a bit shell-shocked if they are active investors. Seeing moves up or down 2% in the S&P 500 for five days in a row is far from the norm. The current market panic around COVID-19 is starting to rival the dog days of the financial crisis more than a decade ago. Fears are mounting about public health and the economy for the days and weeks ahead, as long-term Treasury yields have hit record lows while a raging bull market in stocks suddenly fell by over 15% from last month’s all-time highs.

Investors already have seen trillions of dollars in stock market valuations magically vanish in just over two weeks. Long-term Treasury yields just hit record lows of less than 0.75% on the 10-year and about 1.25% on the 30-year. This all begs the question of whether a recession can be avoided, or if all the makings of a recession are already underway.

24/7 Wall St. has been tracking many outside economic watchers, brokerage firm economists, strategists and forecasters. The good news from the data, at least for now, even considering the stock market bloodbath that has been seen, is that a recession is not already unavoidable. The bad news is that the economic situation and the physical damage of the coronavirus outside of China are both almost certainly going to get far worse before they get better.

At this time, it should be no surprise that expectations for 2020 are likely to head lower. Last weekend’s manufacturing report in China for February was the worst seen on record. The stellar February payrolls report from the U.S. Labor Department was backward looking and was largely discounted by the investing community immediately after it was seen. Even with or without economic stimulus beyond interest rate cuts, it seems almost certain that lower corporate earnings are already written on the wall for 2020. That also likely means lower pay raises, or worse, for employees.

While the U.S. Federal Reserve lowered interest rates (federal funds) by 50 basis points and is expected to lower rates further, that is creating problems for some companies and their earnings power. Also worth asking: Will you feel more confident to go spend money just because already low interest rates go down another half-percent? Perhaps more important is that the International Monetary Fund said that it has $50 billion that is available in “rapid-disbursing emergency financing” to help countries suffering from the virus to help prevent people from dying because of a lack of money. As for the United States, President Trump has signed an $8.3 billion spending bell to target the coronavirus here, for emergency response, vaccine development, sending more test kits and financial aid if needed.

After looking through the various estimates, the first thing that should come to mind is that some of these upside and downside targets may end up being way off. We already have seen airline revenue risks rise from a potential $20 billion hit to potentially a $100 billion hit. Companies and agencies have started to halt travel plans and cancel conferences, and non-employees are being turned away while many employees and contractors are now starting to work from home. Add all that up and it turns into less gasoline, less restaurant spending, fewer hotels booked and lower retail sales.

There is a growing risk that the United States will temporarily move to a stay-at-home economy, particularly if entire counties, states or portions of the country begin closing schools and ordering many more people to self-quarantine or self-isolate. Whether all that ends up creating a recession remains to be seen, but one has to expect that it will feel like a recession, in many aspects of life and the economy alike.

According to a fresh look from Merrill Lynch, the firm has adjusted its 2020 earnings base case of $175 per share down to $160, with an expected price-to-earnings ratio of 17 to 18. The firm has suggested that the S&P 500 will dip to 2,880 to 3,040 before a good entry point is seen to get back into stocks. The firm noted recession risks rising and said that “policy panic” has begun and likely has further to go.

A Goldman Sachs report even from last week suggested a $165 per share target is now the baseline for the S&P 500 companies in 2020. That implies 0% growth, which was far worse than what had been an expectation of about 7% earnings growth.

A report out of Oxford Economics has lowered its 2020 global GDP growth forecast to 2.0% from a prior 2.3%. That would be the weakest level since the financial crisis. It’s also down from 2.6% GDP growth last year. The firm sees the effects of financial market weakness and the coronavirus interrupting daily life and triggering lower consumer spending and investment. The firm also sees investments in advanced economies contracting year over year in the second quarter for the first time since the financial crisis. Oxford economics also expects a slowing of household spending growth.

New Moody’s research indicates that the global spread of the coronavirus is resulting in shocks that are likely to slow economic activity significantly, particularly for the first half of this year. Moody’s has lowered its baseline forecasts for GDP growth in all of the G-20 economies, even if the virus is steadily contained. Its current forecast was taken down to 2.1% from 2.4% for the G-20 countries, and China’s 2020 growth forecast was cut to 4.8% from 5.2%. Moody’s also lowered the U.S. growth to 1.5% from a prior 1.7% estimate. The firm also showed a potential for a far more negative scenario than its baseline forecast, with a sustained pullback in consumption, along with extended closures of businesses, that leads to hurting earnings, driving layoffs and weighing on sentiment, all leading toward “self-sustaining recessionary dynamics.”

The Atlanta Federal Reserve Bank’s last GDPNow update on March 2 was forecasting first-quarter U.S. GDP growth of 2.7%, up from a prior 2.6% forecast. That reading uses actual economic reports, so much of the data is unknown and not factored in until they are released. The Federal Reserve Bank of New York’s latest Nowcast report from February 28 forecast 2.1% U.S. GDP growth for the first quarter. Based on what has been seen in the markets and some of the more live reports, these numbers seem likely to be revised lower rather than higher.

Nikko Asset Management said on March 3 that the impact of the coronavirus will be transient rather than extended. That means that the weakness in global GDP in the first quarter or two will see a snapback in the second half. That said, the firm warned that equities were priced for perfection. While the valuations could still hold, the scenario if the coronavirus greatly worsens and a global recession is extended, then global equities could fall by as much as one-third from present levels.

Charles Schwab warned about the Fed’s 50 basis point cut that the Fed has used up a fair amount of its “ammunition.” Should the economy fall into recession, it’s likely the federal funds rate could go back to zero and the Fed would likely restart its quantitative easing program. It’s too soon to say if that will happen, but it is possible longer term.

There may be a hidden silver lining in the likely job market weakness expected this year, if companies have to furlough or lay off their workers. ZipRecruiter talked about Friday’s strong employment report and pointed out that the Census could magically (or even accidentally) save the day:

Even if private sector hiring takes a hit in the coming months, any slowdown could be offset by a surge in government hiring as 500K Census workers are added to payrolls. In other words, the job market had serious momentum heading into the crisis, and will get a well-timed lifeboat in the form of Census hiring. … Census hiring is not the reason for the strong jobs numbers today, but will show up in the March to July reports.

On March 4, Standard & Poor’s warned that the recent surge of coronavirus cases outside of China poses a rising risk to global economies and credit markets. S&P also stressed that weaker confidence in financial markets would exacerbate the impact. S&P warned that the macro impact (of coronavirus) has doubled since its update on February 11 and that it now likely would shave 0.5 percentage points off of S&P’s 3.3% GDP growth baseline. The firm also noted that this assumes the epidemic will subside during the second quarter of 2020. S&P expects China’s 2020 GDP growth to be about 4.8% in 2020, rather than 5.7%. It has trimmed 0.5 point from the euro area and has trimmed about 0.3 points off the U.S. growth for 2020.

Even The Economist and other publications have chimed in about recession risks on the rise. According to a March 5 report in The Economist, a global recession is unlikely but not impossible. That piece also pointed out that cutting interest rates may not be a proper solution for this downturn as businesses face revenue shortfalls and workers face earnings shortfalls while fixed costs remain in place.

Again, how all this plays out remains to be seen. There are many other stimulative tools we have laid out that the Federal Reserve and federal and state governments can do to help navigate through the novel coronavirus. Unfortunately, this remains a situation that will get worse before it gets better.

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