The U.S. economy is in complete free fall and getting worse by the hour, deteriorating much faster than had originally been predicted when fears of coronavirus began, according to an alarming report from the Washington Post:
“The resulting economic meltdown, which is sending several million workers streaming into the unemployment line, is outpacing the federal government’s efforts to respond. As the Senate on Friday raced to complete work on a financial rescue package, the White House and key lawmakers were dramatically expanding its scope, pushing the legislation far beyond the original $1 trillion price tag.”
Among the businesses hurt worst by the slowdown: Restaurants, theaters, sports venues, and even large offices in places such as New York, where Governor Andrew Cuomo (D) issued a stay-at-home order on Friday, leaving normally active streets in Manhattan desolate, devoid of foot traffic, with the appearance of a ghost town.
As soon as next week, the Labor Department is expected to report that as many as 3 million Americans have filed first-time claims for unemployment. That would be four times more claims than were submitted during the worst days of the 1982 recession. The result will likely show up in an unemployment rate of 20 percent or higher, according to an economist with JPMorgan Chase.
Just how bad will the blow to the American economy be? The total cost could be historic, the Post notes:
“Estimates of the pandemic’s overall cost are staggering. Bridgewater Associates, a hedge fund manager, says the economy will shrink over the next three months at an annual rate of 30 percent. Goldman Sachs pegs the drop at 24 percent. JPMorgan Chase says 14 percent.
“’We are looking at something quite grave,’ said economist Janet L. Yellen, the former Federal Reserve chair. ‘If businesses suffer such serious losses and are forced to fire workers and have their firms go into bankruptcy, it may not be easy to pull out of that.'”
Such a massive economic reversal could well doom President Donald Trump’s chances of reelection.
In recent days, Trump has desperately tried to put a happy face on the bad news coming from all sectors of the business world, promising that the economy will rebound quickly once the COVID-19 crisis has passed:
“We’re going to be a rocket ship as soon as this thing gets solved … We think it’s going to come back really fast.”
But most financial experts disagree with Trump’s rosy view of the future as the number of infections and deaths rise by the day and more American cities going into total lockdown.
Dean Baker, senior economist at the Center for Economic and Policy Research, said everything depends on how long the medical crisis lasts:
“Everything depends on how long we are effectively locked down. If it’s just two to three weeks, then it need not be this bad. But if we locked down for most of the quarter, then we are looking at a really bad story.”
To date, COVID-19 has killed 276 people in the U.S. Nearly 20,000 Americans have been infected with the virus.
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