With riots erupting and the epidemic still on, when could the U.S. economy stabilize?
“8 trillion dollars” and “10 years”, which is the data given by the US Congressional Budget Office (CBO), the coronaviru’s “bill”. Although the United States has now passed through the most difficult period, the depth and duration of the impact on the economy are still worrying. Despite the improvement of the situation, the coronavirus is still spreading. The United States is far from winning this epidemic war. This means that the economic forecast may change at any time. It may be improved under the stimulus of excessive relief plans, or be renewed again due to the outbreak. Facing a crisis. Especially after “George Floyd’s death” detonated the racial contradictions in the United States, a large number of protestors showed up. No one can be sure what the US economic trends will be in a few weeks.
10-year recovery period
The economic impact of the epidemic is unprecedented. CBO released the May edition of the economic forecast report on June 1. The report mentioned that it may take 10 years for the US economy to fully recover from the epidemic. Since the outbreak, the US government and the Fed have poured trillions of dollars into the US economy.
In March this year, the US Congress passed a stimulus policy of 2.2 trillion US dollars, while the Fed lowered the interest rates to zero and introduced unlimited quantitative easing measures. In mid-April, the House of Representatives, controlled by the US Democratic Party, voted for an aid plan totaling $3 trillion. Although all the relief funds are used to offset the impact of the epidemic, the epidemic may still cause the US economy to lose about 7.9 trillion US dollars in the next 10 years.
Despite the stimulus round after round, the economy has not improved. On May 29, the latest forecast of the Atlanta Federal Reserve GDPNow model shows that the US GDP growth rate in the second quarter may fall by 51.2%, which is one of the most pessimistic forecasts of the US outlook.
The riots worsen the situation
While the economy is still in recession, the United States has been stumbled by another stuff. The violent enforcement of the white police in Minnesota in the United States led to the death of African-American man George Freud. It caused racial anger in American society to erupt completely. For days, protests have spread throughout the United States. The New York Times stated that protests have erupted in at least 140 cities and 23 states. Washington, D.C. have used the National Guard and more than 40 cities have imposed curfews.
The epidemics, riots, economics, society, and even politics are interlinked together. The root cause of the riots is ethnic conflict and American social division. The timing of the incident is unbefitting. On the one hand, people face greater economic difficulties and greater emotional fluctuations during the epidemic. On the other hand, during the election period, the federal government usually hesitate when dealing with such problems.
According to data released by the US Department of Commerce on May 28, the U.S. real GDP revised value for the first quarter of 2020 decreased by 5% from the previous month. On the same day, data from the US Department of Labor showed that since the epidemic outbreak in March, more than 40 million people in the United States have applied for their first unemployment benefits. At the same time, they received more than one million people for 10 consecutive weeks. It is first time for US to receive such a large number of unemployment applications in a single week. Although Trump has repeatedly expressed confidence in the economic recovery. Mainstream economists and Wall Street still predicted that the US unemployment rate may remain above 10% by 2021. IHS Markit also predicts that by 2024, employment in the United States will return to the level before the outbreak.