The U.S. economy contracted sharply in the first quarter of 2020

[Lucius]

I would expect it to be effective, and I agree that its development is probably the only way the global economy can start to recover; spending is going to stall while there is risk of infection regardless of regulations. The problem is that it takes years to develop and roll out vaccines. This one in particular should take a bit less time on average considering the gravity of the situation, but we might still need to brace for a multiple-year wait. In the meantime, most people will continue to spend only when necessary.

I am not pessimistic in nature, but I do not like the current situation where governments only focus the public on the current situation and generally avoid talking about the long-term consequences. I am not just talking about an economy that has been hit hard, but also about people who are social by its very nature. Living in isolation for months is difficult, and I know it best because I spent my childhood in the basements hiding from those who invaded my country and bombed it with all possible weapons, so this home isolation is not too much of a problem for me. What I'm saying (and also from personal experience) is that everything that happens will have psychological effects on people, the old way of life has to change.

Reading the various economic analyzes, it is concluded that many countries have actually calculated when and how they will carry out the lockdown, because the goal was for everyone to have a shorter duration of that period. All of that for the purpose that national economy is destroyed as little as possible, because if you close hair salons, restaurants, all the shops (except food shops), schools, colleges, public transport, literally you cut the branch you're sitting on. That's why all countries are in a hurry to get back to normal - but of course with a lot of restrictions that should ensure that the virus spreads as little as possible.

The economic cost of the Covid-19 pandemic can be proxied by GDP forgone, namely the difference between  current  forecasts  and  pre-Covid-19  outlook  (dashed  lines  in  Graph  1).  Under  the  baseline  scenario, annual output loss ranges between 5 and 9% of pre-Covid-19 estimates for the US, and between 4 and 4.5% for the global economy. In worse scenarios, these costs could reach 11% for the US and 8% for the global economy. The latest IMF (2020) forecasts released on 14 April already inch towards these scenarios, with US and global output losses in 2020 projected at 8% and 6% respectively. These costs are an order of magnitude higher than the estimated costs of previous epidemics, and exceed those during the Great Financial Crisis in 2008–09 – when OECD countries on average lost 3% of GDP per year. There are also possible long-term damages from a prolonged economic shutdown, harder to quantify but potentially significant. Bankrupt firms will make no output contribution after containment is lifted, and could  disrupt  supply  chains  of  surviving  firms.  Unemployed  workers  could  lose  skills  and  long-term  relationships with firms which are costly and take time to re-establish. Hardship and demoralisation could in turn have an impact on labour productivity. Experiences from past recessions suggest that these scars on the economic fabric can be deep and persistent

[fiulpro]

See this is why people warned about Trump being the leader.
When people were focusing on improving the facilities and making the nation stronger , he was focusing on building walls and apparently Making America Great Again !
This is so wrong , in the name of nationalism the man did many unspeakable things .
He did not have enough achievements to actually get the government going , plus he is asking help from Ukraine now when at times he called them foolish .
I do not know what else we could have expected because he was the governing body .

[FanatMonet]

In general, the global economy is experiencing a huge drop in 2020, and the Coronavirus pandemic is too large, and it has discovered heterogeneous production cycles in which components from different countries are present, such as many electronics products.

[dothebeats]

Lots of domestic businesses were effectively shut down plus factories exporting goods are also affected, too. 4.8% IMO is still a generous drop considering the amount of affected people in the US plus the increased government spending towards the aid for their citizens. Imagine the US is a big country with tons of gears working to produce goods to sell. If 80% of those goods were to shut down, plus most of the goods that they are selling isn't part of something that people need during these times, economy would surely drop. It was a massive domino effect that led to this sharp drop, and it is hurting not only the US but also the whole world.

[7788bitcoin]

But I dont understand why so much. USA went in lockdown only at end of March.  Europe started around 10th March. USA was at least 10 days latter. How can GDP drop almost 5% when Jan and Feb were positive?  How can be the 2020 predictions for USA around 5%?  Q2 GDP drop will be catastrophic!!! 

It shows that the economy was struggling well before the lock down and for many countries the corona virus will be used as an excuse when there is an election, many business are shut down during this period and it will show in the next quarter and it will be terrible. The elections are coming up and Donal Trump will be having a tough time convincing the voters.

[figmentofmyass]

All of that for the purpose that national economy is destroyed as little as possible, because if you close hair salons, restaurants, all the shops (except food shops), schools, colleges, public transport, literally you cut the branch you're sitting on. That's why all countries are in a hurry to get back to normal - but of course with a lot of restrictions that should ensure that the virus spreads as little as possible.

The economic cost of the Covid-19 pandemic can be proxied by GDP forgone, namely the difference between  current  forecasts  and  pre-Covid-19  outlook  (dashed  lines  in  Graph  1).  Under  the  baseline  scenario, annual output loss ranges between 5 and 9% of pre-Covid-19 estimates for the US, and between 4 and 4.5% for the global economy. In worse scenarios, these costs could reach 11% for the US and 8% for the global economy. The latest IMF (2020) forecasts released on 14 April already inch towards these scenarios, with US and global output losses in 2020 projected at 8% and 6% respectively. These costs are an order of magnitude higher than the estimated costs of previous epidemics, and exceed those during the Great Financial Crisis in 2008–09 – when OECD countries on average lost 3% of GDP per year. There are also possible long-term damages from a prolonged economic shutdown, harder to quantify but potentially significant. Bankrupt firms will make no output contribution after containment is lifted, and could  disrupt  supply  chains  of  surviving  firms.  Unemployed  workers  could  lose  skills  and  long-term  relationships with firms which are costly and take time to re-establish. Hardship and demoralisation could in turn have an impact on labour productivity. Experiences from past recessions suggest that these scars on the economic fabric can be deep and persistent

that's what is weighing on my mind. people don't seem to understand that businesses shutting down for months can completely destroy them---this has a systemic effect on supply chains and layoffs/oversupply of labor.

a recent survey of small businesses shows:



that is staggering and quite scary. without bailouts, half of all small businesses would go bankrupt after "a few months" or less. it's already been 2 months!

and less than half of business owners applied for the SBA relief loans, not all would be approved, and even for those who are, this is the truth:

Aaron Seyedian, founder of home-cleaning company Well-Paid Maids in the Washington D.C area, received a PPP loan through online lender Kabbage after giving up on attempts through his traditional bank, Capital One. But he said the $78,000 in loan money to help pay employees doesn’t increase his business confidence. “It’s like having enough money to pay the rent for one month after losing a job. It’s just so temporary,” Seyedian said.

everyone is talking like we can just "reopen" as if that means flipping on a light switch, and magically we will return to the q4 2019 economy. even if we ignore the waves of bankruptcies that are likely coming, business owners see the writing on the wall re consumer spending:

Revenue has decreased in the past two months for 69% of firms, according to the CNBC|SurveyMonkey Small Business Survey, with 49% indicating that sales had decreased “a lot.” Eighteen percent of small businesses say they have been able to maintain the same level of sales; only 11% indicate a recent revenue increase.

More troubling, though, is where these businesses see revenue going from here: Only 38% expect revenue to increase over the next 12 months, according to the survey, with almost an equal percentage (37%) expecting a decrease. Twenty-three percent expect revenue to remain at the same level.

[abhiseshakana]

See this is why people warned about Trump being the leader.
When people were focusing on improving the facilities and making the nation stronger , he was focusing on building walls and apparently Making America Great Again !
This is so wrong , in the name of nationalism the man did many unspeakable things .
He did not have enough achievements to actually get the government going , plus he is asking help from Ukraine now when at times he called them foolish .
I do not know what else we could have expected because he was the governing body .

Trump's remarks about Lysol's disinfectant injection at the daily briefing forum on the development of COVID-19 in America, became the subject of discussion in Indonesia that the American President had lost his mind. Many trump statements are considered humorous, such as inserting extracts of light into human skin, which are deemed inappropriate by a president of a world superpower.

Trump is a combination of economist and nationalist, now he needs something to bring him elected the second time but the corona pandemic becomes a stumbling block. Just hope that the choice made by Trump is not an economist at war which is Trump's expertise.

[Latviand]

But I dont understand why so much. USA went in lockdown only at end of March.  Europe started around 10th March. USA was at least 10 days latter. How can GDP drop almost 5% when Jan and Feb were positive?  How can be the 2020 predictions for USA around 5%?  Q2 GDP drop will be catastrophic!!! 

Venues were shutting down, people stopped traveling and going to restaurants and bars, etc. weeks before governors issued lockdown orders. The fear of the pandemic (and the economic impact) is a much larger force than the government orders themselves. GDP growth was already weak heading into all of this too.

Q2 numbers will probably be brutal, yes. Most estimates are in the 40%+ contraction range. Somehow, there is still optimism for a V-shaped recovery in the second half of the year. I am not convinced of that myself.

They are really having a hard time controlling their stock market, their economy and as well as the virus. US really needs to have a prior plan so that they can recover one step at a time, they are experiencing issues simultaneously and I believe that their leader are panicking because of a huge number of cases in their country. They think that they are really strong and healthy enough to fight the virus that's why they underestimated the tragedy brought by the Covid-19. The reason why their economy is contracted sharply right now is because the government is focusing and allocating their funds on the hospitals and making people recover from the virus. Hopefully they can recover from their GDP so that their issue about their economy will become lessen.

[plvbob0070]

Since the USA went on lockdown very late, I think that's the reason why their GDP fell that much. Before they impose lockdown, the virus was already spreading and they are being affected already. Travel ban and their tourism I think was already affected even before the lockdown. It makes it even worse for them because the government didn't make an early action about this problem. The virus began last year, no wonder why even without the lockdown it already affected the GDP of the US and its economy.

2nd quarter will even be harder for them. Not only the USA but for every country affected by the virus. 2nd quarter of the year yet there is still no vaccine available, it means the longer this lockdown will last, the more the economy will be affected badly.

[Kakmakr]

We live in a global economy now, so even if the USA had no lockdown, other countries trading with them, would have had a lockdown and their trade with the USA would have gone down. I am specifically thinking of the closure of the International borders and the influence that the tourism income would have had, with almost zero tourist being allowed to visit other countries.

Imports and Exports will also suffer now, because some industries and companies in other countries are closed for business, so they are not manufacturing goods for exports. So let's say a company in the USA are building cars and they import some of the parts from another country, then their production are also halted, because those industries are under lockdown in another country.

The USA will take a lot more damage for a much longer time, because they are the worst affected country in the world. (1.23 million infections and 72 000 deaths) <---- A lot of people will avoid traveling to the USA for this reason alone. 

[AniviaBtc]

But I dont understand why so much. USA went in lockdown only at end of March.  Europe started around 10th March. USA was at least 10 days latter. How can GDP drop almost 5% when Jan and Feb were positive?  How can be the 2020 predictions for USA around 5%?  Q2 GDP drop will be catastrophic!!! 

It shows that the economy was struggling well before the lock down and for many countries the corona virus will be used as an excuse when there is an election, many business are shut down during this period and it will show in the next quarter and it will be terrible. The elections are coming up and Donal Trump will be having a tough time convincing the voters.

No one is expecting this virus to spread so fast around the world and I know that most of the countries here aren't ready and unplanned. That's the most crucial problem in this pandemic, economies are crashing because of the sudden effect of this virus to the world. Everyone's struggling especially that the US are a large country and the number of infected is still increasing and they are already in 1 million+ cases. This lockdown is really helpful and at the same time bad when it comes to economy. It slower the rate of transmission but the economy is not moving properly and having a hard time to grow. GDP will not drop as long as the government also prioritize their economy and execute some effective ways to handle it.

[Shasha80]

America's biggest mistake is to underestimate the corona virus, so it's no wonder the spread of the corona virus in America is the worst.
This is caused lockdown late, so I am not surprised that the economy in America has fallen victim. The first quarter of 2020 is very bad
for America, But the second quarter would be far worse for America if a vaccine was not found to stop the spread of the corona virus.
Hopefully a miracle happens, because America needs it now.

[el kaka22]

There is also an increase nowadays which could be understood as the recovery. There was obviously a fall and we couldn't expect anything else honestly. Think about it the pandemic happened and people were stuck at home, what were you expecting them to do? Go out and spend money? There is no way to earn money or spend money right now if you are expandable and there was a lot of people who were expandable for a job, sure you are needed to grow and get bigger, but to survive you weren't needed, to survive only a handful of people is enough for many places.

So, this was an expected drop. It doesn't mean that the system works, system doesn't work and it showed us a lot of times before, only a decade ago or so we were in another drop, but just because the system is crooked for the wealthy and it doesn't work for us doesn't mean that this wasn't expected.

[bits4books]

I think you're overreacting. The drop in GDP is due to the closure of most shops, air transport and tourism.
Yes, there will be drawdowns in the economy and they will be quite noticeable. But how quickly it all started - so quickly everything will recover, I believe.

i don't mean to be a downer, but this could go on for years. since there is no vaccine or herd immunity, experts are expecting cases to rise again after reopening---not to mention during the winter flu season. are you gonna feel safe flying in airplanes, eating in restaurants/bars, shopping often? lots of people won't.

and then you have the economic damage: so many people will be broke (and unemployed) after this, not spending money. as abhiseshakana points out, consumer spending is vital to the american economy. it accounts for something like 70% of all economic activity.

without a miracle treatment/vaccine, i don't see a quick recovery happening.

I'm not saying that it is not necessary to develop vaccines to treat people and to support them. I'm saying that getting out of the current situation will be faster than trying to get out of the great depression or 2008.
As soon as they find a fully working 100% method of vaccination, the world will come to life again and everything will be as before in just a year and a half.
Anyway, investors think that even without vaccines economy will start to recover in  2021 Q1

[exstasie]

The Trump administration, desperate to improve the economic outlook, is giving up on defeating the corona virus: https://www.cnn.com/2020/05/06/politics/coronavirus-task-force-trump-pence/index.html

They are done with attempts of mitigating the virus via quarantining and other extreme stay-at-home measures. They have decided that enough time has been spent on the public health crisis and now is the time to focus on the economic crisis. And they are, quite candidly, hoping and praying that what they've already done to combat the virus is enough if and when it comes raging back.

I assume they will continue thwarting testing efforts because of how bad the numbers look, and will look in the future. The White House projection for death counts has nearly doubled recently and will likely worsen again with reopening. Mitigation and containment obviously failed, cases are still rising and will rise more after reopening, so I believe eventually governors will begin shutting states down again as the health care system gets overrun.

This is all building up to an eventual brutal crash in the stock markets when that next wave of shutdowns occurs.

[Febo]

Since the USA went on lockdown very late, I think that's the reason why their GDP fell that much. Before they impose lockdown, the virus was already spreading and they are being affected already. Travel ban and their tourism I think was already affected even before the lockdown. It makes it even worse for them because the government didn't make an early action about this problem. The virus began last year, no wonder why even without the lockdown it already affected the GDP of the US and its economy.

2nd quarter will even be harder for them. Not only the USA but for every country affected by the virus. 2nd quarter of the year yet there is still no vaccine available, it means the longer this lockdown will last, the more the economy will be affected badly.

Yes tourism also trade with China. China was locked down already in February. Also another thing. California that is by far biggest USA economy, had virus and businesses closed even before Europe in early March. Same as Washington state. So it sort of makes sense now.

[figmentofmyass]

i don't mean to be a downer, but this could go on for years. since there is no vaccine or herd immunity, experts are expecting cases to rise again after reopening---not to mention during the winter flu season. are you gonna feel safe flying in airplanes, eating in restaurants/bars, shopping often? lots of people won't.

and then you have the economic damage: so many people will be broke (and unemployed) after this, not spending money. as abhiseshakana points out, consumer spending is vital to the american economy. it accounts for something like 70% of all economic activity.

without a miracle treatment/vaccine, i don't see a quick recovery happening.

I'm not saying that it is not necessary to develop vaccines to treat people and to support them. I'm saying that getting out of the current situation will be faster than trying to get out of the great depression or 2008.
As soon as they find a fully working 100% method of vaccination, the world will come to life again and everything will be as before in just a year and a half.

the most optimistic estimate for a widely produced and safe vaccine = 1.5 years. and that would be record-shattering for vaccine development so let's not get our hopes up too much. 5+ years is the typical development cycle, and sometimes (as with the SARS coronavirus) no vaccine is ever successfully developed.

the economic damage is quickly surpassing 2008. maybe this recession will end up somewhere between 2008 and the great depression.

[bits4books]

i don't mean to be a downer, but this could go on for years. since there is no vaccine or herd immunity, experts are expecting cases to rise again after reopening---not to mention during the winter flu season. are you gonna feel safe flying in airplanes, eating in restaurants/bars, shopping often? lots of people won't.

and then you have the economic damage: so many people will be broke (and unemployed) after this, not spending money. as abhiseshakana points out, consumer spending is vital to the american economy. it accounts for something like 70% of all economic activity.

without a miracle treatment/vaccine, i don't see a quick recovery happening.

I'm not saying that it is not necessary to develop vaccines to treat people and to support them. I'm saying that getting out of the current situation will be faster than trying to get out of the great depression or 2008.
As soon as they find a fully working 100% method of vaccination, the world will come to life again and everything will be as before in just a year and a half.

the most optimistic estimate for a widely produced and safe vaccine = 1.5 years. and that would be record-shattering for vaccine development so let's not get our hopes up too much. 5+ years is the typical development cycle, and sometimes (as with the SARS coronavirus) no vaccine is ever successfully developed.

the economic damage is quickly surpassing 2008. maybe this recession will end up somewhere between 2008 and the great depression.

All right then we'll all go back 20 years and then another Hitler will be born and reshape Europe. Is that what you wanted to read here? I'm just trying to be a little optimistic at the time when every site is filled with information noise and news shit.

[7788bitcoin]

All right then we'll all go back 20 years and then another Hitler will be born and reshape Europe. Is that what you wanted to read here? I'm just trying to be a little optimistic at the time when every site is filled with information noise and news shit.

There is nothing wrong in having an optimistic view about the situation but when you say that when the virus situation is sorted everything will be back to normal and figmentofmyass just explained how long will it take to have a vaccine and the economy is crumbling and the jobless people are rising and it will not be back to normal just like that. The real damage will be known in the next two years, right now what we know is the situation is really bad but we are yet to understand the extend of the damage.

[abhiseshakana]

There is nothing wrong in having an optimistic view about the situation but when you say that when the virus situation is sorted everything will be back to normal and figmentofmyass just explained how long will it take to have a vaccine and the economy is crumbling and the jobless people are rising and it will not be back to normal just like that. The real damage will be known in the next two years, right now what we know is the situation is really bad but we are yet to understand the extend of the damage.

Hoping for the best but preparing for the worst is a wise move. The decision of the White House not to issue projections is one proof that the condition of the American economy is alarming. But in the mirror of American history, America will rise up and with the consideration that the pandemic is prevalent in almost every corner of the world.

https://www.washingtonpost.com/business/2020/05/28/white-house-coronavirus-economic-projections/

Due to Corona, which spread to 215 countries, many countries made a total travel ban and border shutdown. While the majority imposes a partial travel ban and border shutdown. The level of anxiety over a pandemic is the greatest compared to the period of the financial crisis that has happened several times. Capital owners withdraw their capital and move it to safer assets such as gold and dollars.

So, demand decreases, investment decreases, unemployment increases, budget deficits. But neither the state nor the public will remain silent seeing this condition. The majority will do what they can to move, either with the profit or humanitarian motives. Vaccines are indeed the only solution to overcome the pandemic and to break the lethal effects of the corona pandemic in the economic sector, but even if the vaccine is limited to expectations, humans will not give up.