Anonymous 3m 652 #covid19
The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
At the beginning of the year, most investors assumed the 11-year bull market to continue, only to be shockingly disillusioned by the notion of the spread of Coronavirus. As a result, the Dow fell from a record high for a bear-market territory in a matter of weeks.
Investors need a way to reduce risk, and there are too many unknowns surrounding COVID-19 for investors to foretell the economic impact, leading to fear and extreme volatility.
As COVID-19 rips through the biggest cities in America, it has affected over 140,000 Americans as they have been confirmed infected.
The quarantines and lockdown have been the only way to limit the spread of the chronic virus.
Due to this effect, the united state of America’s economy has been experienced freezing, with unusual force and speed. The stock market has declined at a quarter from its highest point last month, wiping out three gains.
Last week the news announce that over some millions of Americans (3.28 million) applied for unemployment benefits, the highest figure ever recorded. Unemployment spurts up far faster than it did during the 2008 recession, a sign the economy is headed toward a recession. How long is the COVID-19 flop last?
To surmise the negative effect of the pandemic on the economy, consider its impact on different firms. Consumption makes up seventy percent of America’s Gross domestic product.
Still, consumption has fallen as markets close, and houses hold off on significant buying; they worry about their finances and jobs. The investment makes up 20% of GDP, but organizations are putting off investment as they wait for evidence on the full cost of COVID-19. Entertainment, Arts, restaurants, and recreation have a total aggregate of 4.2% of GDP. With movie theaters and restaurants closed, this figure will now be closer to zero until the quarantines and lockdown are lifted.
Manufacturing has a total aggregate of 11% of the U.S. GDP. Still, much of this will be disrupted because factory closures have hindered global supply chains and because organizations are shutting down factories in anticipation of reduced demand. GM and Ford, for example, have announced temporary closures of car factories.
As companies rack up losses due to closures, layoffs have already followed. Small businesses will struggle to keep employees on the payroll as their income drops. Some Countries are taking steps to help companies to avoid layoffs, and the United States would be wise to do so as well.
The U.S. Congress has passed an incentive bill that caters to hundreds of billions. Providing cash at hand for Americans “low and middle-income, “which should help laid-off workers make ends until the economy begins to change positively. The legislation provides for $350 billion in “loans” for firms targeted at companies with less than 500 employees. These loans will be forgiven to firms that didn’t lay off employees or cut wages to function like grants to businesses.
How far is the economic recovery? That depends on when the virus’s spread can be slowed, and businesses can be reopened.
President Donald Trump suggested that the economy will be raring to go very soon. But I am judging from the increase in the spread of the virus in places like Italy and the increase in COVID-19 deaths cases. Yet, it is naïve to think that this is the point that life will return to normal. If restaurants and businesses are reopened, then the virus will start spreading. Some parts of the United States have not adopted the lockdowns needed to slow the infection rate.
Most projections by health experts imply something similar is necessary to reduce the virus’s spread rate. Italy has suffered worst from COVID; it took a month to reduce the death rate from infections, despite complete lockdown and strict quarantines.
And lastly, most cautionary action has been taken on the state, federal, and city-level to ensure as many Americans as possible remain uninfected and safe to slow down the spread of COVID-19.