How will the US Economy be affected by coronavirus?
Minneapolis Federal Reserve Bank head Neel Kashkari said the US government should take steps to alleviate the unemployment wave that is about to put the country in serious trouble as it closes economically to prevent the spread of the coronavirus pandemic.
Neel Kashkari said that one possible option is to give forgivable loans to small businesses that hold their workers, and it is also better to avoid mass lay-offs than to try to pull people back into the workforce that could last for years. One of the reasons why he used such a statement stated that this was the underlying reason for the great economic crisis in 2008-2012. Because it is possible to state that it takes a serious time like 10 years to decrease the unemployment level to normal levels after the 2008-2012 Global Economic crisis.
The US seems to be entering a sharp economic contraction already. It currently produces much fewer goods and services than a month or a quarter ago (during the events that developed with Covid-19). It is anticipated that these contractions will continue throughout the process when businesses are not opened and people cannot work. Of course, the impact of workers or enterprises expresses a very important rate in this situation. On the other hand, the fact that economic activities have been influenced in shaping this situation, that is, has a duty coming from the government.
Another point is that we can predict that when a treatment for the virus arises, when the infection spread rate is observed, or when the tests indicate that the risk of infection involves less risk than in the early stages, governments will undergo corrections at the point of restrictions and activities will be resolved.
J.P. According to the research by the Morgan Chase Institute, a typical small business in the US does not have enough money to cover expenses even if its income is cut off completely. In minority communities where profit margins are often narrower, typical cash reserves are even smaller.
With this statement, it is possible to state: shops, restaurants, social activity areas, shopping malls, etc. It will not be wrong to state that the recruitment of workers, with the steady growth of factory production rings, that people have achieved economic prosperity and start supporting the economy addressing their needs will suddenly increase the economy.
Parliament and the Senate submitted a trillion-dollar recovery offer this week, but economists say they are wondering where the money will come from to finance the money. We also see that the US government has solid resources for incentives and points to the low rates the government borrows. However, it is possible to say that the implementation of economic measures or incentives to be taken by the US government in this process works in the same proportion as to how long the coronavirus effect lasts. The probability that the economy will suffer serious losses if this process is prolonged (in periods longer than 1-2 months) is an obvious problem.
Source : The New York Times and BBC News
Haldun BAYRAKTAR
