New Great Depression forecast in USA

The measures taken by Washington to support the economy would have been effective if the pandemic had lasted 3 months, but now the country is heading towards collapse with years of mass unemployment.

This is the subject of an article by Reuters.

Analysts’ forecasts and statements by Federal Reserve officials make it clear that the recovery of the American economy is in great doubt, and the toughest tests are yet to come.

During the summer the Americans had the opportunity to receive money from the state support programme, but now the allocated budget has been emptied. The Fed helped launch a round of private corporate funding, but risks leaving companies alone with problems if the business does not recover soon.

“Given the scale of the economic downturn caused by the pandemic, we still face the possibility of an impending wave of credit downgrades and defaults”, – says the report from a panel of analysts including Harvard University Professor and former Fed official Jeremy Stein.

After companies sold corporate bonds worth a record $1.7 trillion to private investors, the Fed may have to save the market from the total collapse that has so far been avoided.

Epidemiologists predict that coronavirus proliferation will accelerate in winter. It is possible that the US will again be subject to strict quarantine. The UK is already on this path. However, this means stopping hiring and cutting costs.

“I believe the pandemic will worsen this fall and winter,” said Eric Rosengren, Head of the Boston Federal Reserve Office, in a comment to Reuters. – Some parts of the country will be blocked, <…> in any case this will lead to lower economic activity.

He noted that the measures taken so far “would have been good if the pandemic had lasted three months, but the pandemic had not lasted three months”.

Comments: