US Economy: There Could Be A Depression Without A Coronavirus Vaccine, Moody’s Analyst Warns

Moody’s Analytics chief economist Mark Zandi on Friday said that the U.S. economy could risk a depression if no vaccine for the coronavirus is discovered.

“If we get a second wave, it will be a depression,” Zandi told CNBC’s “Trading Nation” program. “We may not shut down again, but certainly it will scare people and spook people and weigh on the economy.”

Investopedia defines a depression as "an extreme recession that lasts three or more years or which leads to a decline in real gross domestic product of at least 10%."

A second wave of the virus would likely force many states to issue new stay-at-home orders, shutting down non-essential businesses. This would hurt industries across the country and hamper economic growth.

“It’s critical. It’s a necessary condition for the economy to fully recover,” Zandi said, regarding the development of an effective vaccine. “We’re going to see the market reevaluate things at some point.”

Zandi's warning echoed comments from other economists. The International Monetary Fund in mid-April claimed that the global economy faced the worst downturn since the Great Depression, forecasting a contraction of 3% in 2020.

The Harvard Business Journal, however, released a report in early May that it might be premature to expect a Great Depression.

"It’s a long way from a macroeconomic shock — even a severe one — to a structural regime break, such as a depression or a debt crisis," the publication notes.

Unemployment hit 14.7% in April, with the country losing 20.5 million jobs during the month. Senior White House economic adviser Larry Kudlow said Sunday that he expects economic numbers in May to be worse, as the country grapples with the impact of the virus.

In late April, top White House coronavirus task force member Dr. Anthony Fauci warned a second wave of the virus is "inevitable." Multiple pharmaceutical companies, such as Pfizer, Moderna and Inovio, are working on a vaccine, while Gilead Sciences has developed a treatment called remdesivir. The Food and Drug Administration recently granted emergency use authorization for remdesivir, with heavily impacted states disbursing the drug to hospitals.

The United States currently has the most COVID-19 cases in the world. As of Monday at 11:45 a.m. ET, there are 1,332,411 cases in the U.S., with the domestic death toll at 79,606.