The economy is finally recovering from the coronavirus, but the effects will not go away for long.
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If the end of the huge shortage of toilet paper is any indication, the US economy. United States It has already bottomed out and a fragile recovery is underway.
After hard-to-find months, toilet paper is becoming more available on supermarket shelves and in popular online places like Amazon. Americans do not store as many supplies or are desperate to find where to find scrolls, except in a decreasing number of coronavirus hotspots.
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Toilet paper is not the only sign.
The 50 State partially reopened its savings, people are slowly return to work, consumer confidence has increased, and Americans drive further and leave their homes more frequently, says social mobility trackers. The signs of awakening are everywhere.
“The economy has bottomed out,” said Steve Blitz, chief economist at TS Lombard.
Watch:MarketWatch Coronavirus Recovery Tracker
The big question, which worries everyone, is how quickly the United States is recovering from the impact of a coronavirus pandemic that triggered the fastest and deepest economic depression in the modern history. Wall Street forecasting company IHS Markit predicts second quarter gross domestic product will drop 40% at an annualized rate, overshadowing everything the United States has seen before.
Economists have no doubt that the United States United States You will experience an explosion of growth before the end of the year. Blitz compared the economy to an underwater rubber duck in a bathtub. Once released, it shoots briefly in the air, before falling.
Analysts say this is the most likely path to recovery. I know. United States They will receive a blow after the removal of most restrictions on coronaviruses, but the economy will not be restored to pre-crisis levels for at least a few years.
The biggest barrier, of course, is the virus itself. As long as a vaccine or treatment remains elusive, many Americans are likely to continue to distance themselves socially and avoid large crowds of their own free will. Although the vast majority of people who contracted the virus have survived, a recent Harris Interactive survey found that 50% of Americans think they will die if they receive COVID-19.
“A full recovery of the economy will depend on how well society controls the pandemic,” said Boston Federal Reserve chairman Eric Rosengren. “If consumers are afraid to eat, shop, travel, loosening the laws can do little to bring customers, and therefore jobs.”
Lily:There is a limit to what the Fed can do to help, says Rosengren in a MarketWatch interview.
Without a cure, large and critical segments of the economy will require radical changes just to survive, which could result in the loss of millions of jobs. These industries include airlines, hotels, retail stores and restaurants.
The restaurant reservation site OpenTable, for example, predicts that one in four restaurants will likely close due to the virus. And airlines that typically sell at least 80% of their seats to make money will have to cut flights, services and jobs if only 60% of their seats are occupied in a post-pandemic world. These are just a few of the nightmarish scenarios.
Watch:Total TSA of passenger trips
For the time being, millions of workers in these fields are without authorization and the government is paying them unemployment benefits. Others who work for inactive small businesses have been reinstated into the company’s payroll through a federal emergency program that offers repayable loans.
However, if these job losses go from temporary to permanent, the recovery will be even more difficult, keeping unemployment double-digit until at least 2021.
The unemployment rate unofficially rose to almost 20% in May, according to a government analysis, up from just 3.5% three months ago. More than 20 million people lost their jobs in April alone.
Lily:Great depression 2020? The unofficial US unemployment rate. United States It is at least 20%, or worse
Feeling growing pressure from the public and concerned about the decline in tax revenues, each state reopens its economies or eases restrictions in an attempt to limit the damage.
“The more restrictions there are on retention, the more likely it is that job losses will be permanent rather than temporary,” said economist Stephen Gallagher of Societe Generale.
It is becoming increasingly clear that federal aid works for small businesses and that the state is reopening. In early May, the number of Americans receiving unemployment benefits, known as continuous claims, actually declined for the first time since the start of the crisis.
“The much slower increase in incessant claims suggests that people are now starting to return to work,” said US chief economist Paul Ashworth of Capital Economics.
Trump’s White House, aiming for the 2020 presidential election, is urging states to reopen even faster. However, most economic observers, including the chairman of the Federal Reserve, Jerome Powell, suggest that Washington will have to spend even more than the $ 3 trillion it has already approved.
This is the biggest shock we have seen in living memory. The question that arises in the air is, is th is enough? Powell briefed senators during a Tuesday hearing on emergency business loans.
The next crucial economic event is likely to occur in mid-summer, when federal programs offering unemployment benefits and additional subsidies to keep workers in small businesses expire. If there are not enough workers who can return to work because of slow business, Congress may need to add more money to the pot to avoid more layoffs and another impact on the economy.
State and local governments are also facing unprecedented cuts in tax revenues and are forced to fire dozens of workers. Democrats and Republicans are divided on whether to help them, but if the crisis worsens, a reluctant Trump White House may have to come to the rescue.
In the early fall, fear of the virus returning is another potential obstacle on the road to recovery. If the disease starts to spread again and forces more state blockades, all of the progress made during the warmer months could be lost.
Even if the virus remains contained in the fall, the persistent threat ensures that states will retain certain restrictions, limiting the size and speed of the rebound.
“A slow reopening will limit a new viral epidemic, but it will also prolong stress for workers and businesses,” predicted economists at the Northern Trust.