Last month the re-opening began. Throughout the country different states began opening their economies for business along with certain guidelines. Nonetheless there are some concerns about the timing with some experts warning against the potential of catalyzing a second wave and thus an even greater spike in re-infection and economic hardship.
Category: Economics
COVID-19: Fiscally Recoverable?
We know that the global COVID-19 crisis is hitting firms and individuals very hard in many ways, not least of all financially. What economic experts and financial organizations saying about this?
On the one hand, Kristalina Georgieva, IMF Chief, points out that there has not been a fiscal crisis this bad for over a hundred years, since the Great Depression. She believes it to be “the worst crisis since the Great Depression a century ago,” and not only that, but there will likely be lasting damage.
In the space of merely three weeks, 17 million US employees are now hitting the unemployment line. New York Federal Reserve Bank economists are thus comparing this to a natural disaster (such as a massive earthquake) as a standard financial crisis usually happens over a longer period of time. However, given that there are not the same physical consequences, it is believed that a faster economic recovery will be more likely.
Former US Treasury Chief Economist and Peterson Institute for International Economics contributor Karen Dynan – while noting the 20 percent plummet in the US economy in April and May – is predicting a 7.2 percent rebound in the US economy next year, year-over-year.
Further, on the other hand, some economists are predicting a “solid rebound” once people can get back to work.
Coronavirus Relief Bill
There is a $2 trillion Relief Fund Bill for Employee Retention set up by President Trump. But should that run out of money, he has pledged to seek additional funding from Congress. During a COVID-19 White House briefing, Trump said:
“This is money that’s really going directly to the people who need it, the small businesses who need it, and the workers that need it. When we open, we want to open strong with businesses that are going.”
Known as the CARES Act – the Coronavirus Aid, Relief and Economic Security Act – this has been hailed as “the largest economic stimulus bill in modern history,” more than 100 percent higher than the Stimulus Act initiated during the Financial Crisis of 2009.
Hope for US Economy
President Donald Trump said Tuesday he wants the U.S. economy to “open” back up by Easter Sunday, despite expert warnings about the deadly threat of the coronavirus. Easter is April 12, less than three weeks away. Medical experts had recoiled at Trump’s suggestion that Americans could gather en masse amid the coronavirus outbreak.
America’s Economy
America’s Economy is the world’s wealthiest and most powerful. Even macro-economists find it challenging to picture this as it is just so large. But the numbers speak for themselves. Since 1871 America has been the world’s largest economy. Indeed in 2018 it was measured at $20.58 trillion in 2018 in nominal terms.
For comprehension purposes the only way even macro-economists can fathom this enormity is by looking at GDP and labor force numbers as well as trade balances.
So let’s now look at trade balances. Last year goods and services trade deficit was valued at $616.8 billion; imports – $3.1 trillion and exports – $2.5 trillion – not the best figures. Adding insult to injury the trade deficit just for goods was $866 billion.
However, there was still a decline in the overall trade deficit for America in 2019 so that is definitely a good sign. Moreover, the US’s goods deficit with China declined too. Still, experts believe that many more stringent policies must be put in place to further reduce the deficit.
Recharge Your Community’s Economy
Four one-day workshops are being offered – at no fee – by Native American Development Corporation, Rural Community Assistance Corporation and the People’s Partner for Community Development. The first one is next week, March 24. This will be followed by April 28, May 12 and June 16 – each one will follow from the one before and will last for 6 hours.
To be held at the Charging Horse Casino Bingo Hall (on East U.S. Highway 212), they will start at 9am and finish at 3pm. The subjects covered include: an analysis of where the economy is today; pinpointing emerging economic opportunities for the future; how to select the right leaders who are best equipped to respond to those opportunities; a development of plans to make those visions a reality.
US Economy: Growth Industries
The cement industry in America seems to be faring well. One measuring tool is cement consumption and right now it has been relatively high. What’s more is that experts anticipate it will continue to grow (albeit modestly) over the next few years. As Portland Cement Association’s Senior VP and Chief Economist Ed Sullivan pointed out:
“The economy doesn’t have the zip and the vigor that it had 10 years ago, and so what we’re seeing is the economy’s now in late stages of economic growth and recovery. That suggests that overall growth is going to start to slow, which is reflected in a slowdown in GDP numbers. It’s also reflected in our slow-down in job creation numbers.”
Sullivan added that both job creation and consumer sales numbers have not plummeted at all which is also a good indicator of stabilization and continued growth as well as an increase in home prices.
There have been some upturns in solar job industry following a dip in employment in the industry. Employment in the solar industry jumped by 2.3 percent in 2019 and 5,600 jobs were added during the same time frame. In addition, 31 states had an increase in solar jobs in 2019.
FOX Business Network (FBN)
This is a video of a panel from the World Economic Forum talking with Treasury Secretary Steve Mnuchin. The question being addressed is if President Trump is accurate in his statement that the current economic boom being experienced in America is unprecedented.
America is currently harboring an overwhelmingly huge debt right now, owing more than four times what it did just two decades ago. oXYGen Financial founder and CEO Ted Jenkin said:
“Like any budget that you have in your household, we have too little income and too many expenses. [However, this could have valuable significance for the consumer. It doesn’t look like interest rates will increase all that much in the short-term since if they did reach 6 percent or over] the net interest on the debt in our fiscal deficit would actually be the No. 1 line expense on our budget.”
But is this really the case? If – as Jenkins would have us believe – the consumer is in a better position now, how come the recorded number of new vehicles purchased was lower last year than in previous years. According to research from Cox Automotive, Edmunds and J.D. Power/LMC Automotive, there was a 1 percent decrease in sales from 2019 as compared to 2018 – the lowest in sales since the 2014 figure of 16.5 million.
President of Americas Operation and Global Vehicle Forecasting Jeff Schuster said:
“Despite a lot of noise and some uncertainty with light-vehicle sales, 2019 has turned out to be a strong year. Much of that uncertainty has dissipated with USMCA nearly across the finish line, the progress with the China trade deal and an economy that is expected to be supportive.”
Trump supporters also believe that this will help business leaders believe that any bolster in consumerism will lead them to put faith in politicians for the upcoming 2020 election.
2020 Economic Outlook
The outlook for 2020 for the US economy is overall good, according to key indicators including: interest rates, stock market, consumer expectations, inflation, employment and, in particular GDP rate as that is an accurate indicator of America’s production output. However, others have suggested a reduction from the 2019 2.2 percent figure to 2 percent this year. Indeed since 2017, real GDP growth was actually higher than average with a 2.5 percent figure for each calendar year. This was mainly attributed to fiscal stimulus.
With Trump’s promise to boost advancements in the economy to 4 percent which is extremely fast, and – some would say – even too fast leading to overconfident consumerism. This could then result into a problematic boom and ultimate bust to the economy. Indeed, there has been a marked growth spurt in the nation’s economy, especially as compared to other developed economies.
The dollar is also encountering a safety net, similar to the Swiss franc and Japanese yen. This means that investors will more likely want to put money into US bonds and stocks. There is an anticipated 3 percent growth within the next two years of the US dollar.