US Nears Recession in Wake of Coronavirus Pandemic
The chance the U.S. will be in a recession this year has now reached 80%, according to analysts for Reuters. The impact of the coronavirus has nearly pushed the U.S. completely out of its longest expansion period on record. Businesses have shut down across the world and lockdowns have been issued in major cities worldwide, handicapping the economy.
In response to the pandemic, the Federal Reserve cut interest rates down to nearly zero and "restarted its asset purchases program," according to Reuters, in an effort to stimulate the economy. This has helped the markets to continue functioning, but analysts are unsure for how long.
There's a chance the economy can bounce back in the third quarter, but not after falling into recession, said Michelle Meyer, U.S. economist at Bank of America Merrill Lynch, in a Reuters article. Much of the recovery is dependent on the status of the virus, which has been unpredictable.
"We expect the economy to return to growth in Q3," Meyer said. "Jobs will be lost, wealth will be destroyed and confidence depressed. The salvation will come if there is a targeted and aggressive policy response to offset the loss of economic activity and ensure a sound financial system."
—Christie Citranglo, editorial associate