The USA economy is in a COMA
The USA economy is in a COMA…
But that doesn’t mean we’re heading into a depression just yet.
We have been told “stay home to mitigate the effects of Covid-19”
Most states have a full or partial stay-at-home order in place.
Essential employees can go to work. Others work at home.
We have never seen a rapid “shut down” at any other time in US history.
That is why the economy is in a COMA.
At last count, 36 million americans filed for unemployment.
The negative impact of coronavirus on the U.S. economy has been swift and dramatic, and we’re already seeing some of the typical signs of a recession. Along with rising unemployment rates, retail sales plummeted 8.7% last month, while total industrial production fell 5.4% — the largest drop since January 1946. The drop in retail sales was the biggest monthly decline ever recorded, blowing past the 4.3% slump that the U.S. experienced in November 2008 during the Great Recession, according to the National Retail Federation.
Therefore, it is fair to say we are in a recession. The economy isn’t behaving “normally” so that’s why economists and financial experts tend to use the word recession at this time. Whether you call it a technical recession in the sense of two quarters, we are in a deep, deep downturn. Some experts even fear that the U.S. is heading into a full-blown depression.
What is a depression? A depression just means a long recession. The difference between a recession and depression comes down to the length of time that the economic downturn lasts and also the depth, or severity, of the effects. The Great Recession, for example, lasted from December 2007 until June 2009 and unemployment peaked at 10%. during the Great Depression, which lasted about 10 years, from 1929 to 1939, unemployment reached 25%.
The total number of Americans without a job could hit 47 million, or about a 32% unemployment rate. If by December 2021 the unemployment rate is above 15%, then it is likely that we will be in a depression. A lot can happen between now and then. The weather forecast seems more predictable than the economy these days.
The longer the current coronavirus pandemic goes on, the more damage it will do to the U.S. economy. Who can disagree with that?
The government has been seeking to pass bills to offset the economic impact of Covid-19, and if that successfully continues, that is one way to possibly head off a depression.