US recession will drag on for several years – Bloomberg names 5 reasons

The results of May could give Americans the false hope that the long-awaited economic recovery began in the United States. The question is how long will it last?
US recession will drag on for several years - Bloomberg names 5 reasons

This is stated in the material of the Bloomberg agency.

According to media reports, the United States should not wait for a V-shaped recovery. It will be protracted and painful, because the coronavirus pandemic has set a number of relevant trends.

The first factor that impedes the rapid resumption of economic activity is human psychology.

“The unprecedented speed and depth of economic devastation from the coronavirus can cause pessimism among American businessmen, consumers and investors, which will drag on for years”, –  the agency explained.

The second obstacle will be structural adjustment. As you know, the pandemic has changed the very format of economic activity. More and more often, people began to buy goods on the Internet, work in offices was replaced by remote ones, even people “moved” home entertainment from public places. This trend is irreversible, which means many shops and restaurants will go bankrupt. It will take a lot of time before entrepreneurs are fully accustomed to the new realities.

Moreover, structural adjustment will occur on an international scale: supply chains and the demand model for imported products will change. All this will adversely affect American exporters and companies that depend on foreign manufacturers.

From all of the above, another fourth negative trend results. So, if half of the window displays on the street are closed, then such a street ceases to be attractive. Here foot traffic is reduced, trade ceases here. Bloomberg notes that entire areas and even cities may never recover from the coronavirus, especially when you consider the pogroms that swept across the United States.

The fifth reason for the protracted recession is political mistakes. Republicans are already refusing to take additional measures of state support to the population.

“This could force financially constrained states to make deep, devastating budget cuts, or prevent many unemployed from paying rent. Rejecting relief measures, while unemployment is still higher than ever after the Great Depression, would be a serious mistake”, – the article says.

Thus, despite the preconditions for economic recovery, according to Bloomberg, the crisis could drag on until the middle of the decade.


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