Morgan’s analysis on impact of Covid on American Economy

The direction of the global economy in some extent is guided-both-directly or indirectly-by the US presidential election, its economy or the economic and trade policies it adopts, including the steps that major US investors take. This is why the world lookouts the US economy.

Analyzing the current scenario,, an American economic portal, has commented on the prevalence of the Covid-19 transition and its impact on the US economy, analyzing why the current crisis led by Covid it is not the next Great Depression since 1930.

Fortune writes: Last spring, April 24, when the number of Covid-19 infected people in the United States reached 36741 mark in a single day, the US economy crashed spectacularly. Gross domestic product (GDP) fell at an all-time high, and millions of workers lost their jobs almost immediately.

So now, when US is reporting two million new infections every day, why isn’t the country’s economy worse like before?

The scenario of this epidemic is still serious. CDC Director Dr. Robert Redfield stressed that the next few months will be one of the most difficult for the US, in terms of public health. The hospitals are almost at full capacity. He has projected that the number of deaths due to Covid-19 will increase from the current 277,000 to 4.5 million by the end of February 2020.

However American economists seem happy to be ‘even ignorant’ about it. A report of Consensus Economics prepared after surveying 26 economists suggest that the US economy will grow at an annual rate of 3.6 percent this quarter and further by 3.1 percent in the first quarter of 2021.

However, JPMorgan’s team says it will shrink to -1 percent in the next quarter. By comparison, the US economy contracted by 31.4 percent in the second quarter of current year.

However, these 26 enthusiastic economists may be right, at least they are keeping their word clear. However, Morgan has put forward four arguments in defense of his ‘sign less optimism’.

First, the economy has quickly embraced many things
In the 2020 economy, almost everything has happened at the speed of Formula One race. Last spring, US GDP plummeted in a matter of weeks, even during the Great Depression of 1930 it took three years and a half.

Economists say the strong advantage of this kind of momentum is that the economy will only have to go through a small loss. In a long-term recession, workers’ skills are declining, while machinery is deteriorating or out of order.

But this time it did not happen. Companies invented rapidly, and while many businesses have failed or are in crisis due to Covid, entrepreneurs have started new businesses at a high pace for at least the past decade. With the number of new Covid infections low in the summer, the economy was almost non-existent. But as the number of new Covid infection cases began to rise, the economy began to move again.

Second, vaccine production has started
Even though in the next few months a large portion of the world’s population will be out of reach of the vaccine, many companies have begun to plan for a resurgence after realizing that the vaccine is sure to come. The winter months can still be difficult for businesses, however, it will not be as bad as it was during the potential indefinite lockdown.

V (vaccine) -Sapped recovery ‘Goldman Sachs said in a recent launch -‘ During the coming spring and summer as the population continues to develop resistance to the virus. Even in the areas of travel, accommodation (including hotels) and food services (including restaurants), which have been depressing due to Covid, economic activity is rapidly returning to normal.

Third, adequate financial relief packages and continued support from the Fed (US Federal Reserve)
This is extremely important. The U.S. Congress has made encouraging predictions based on doing homework on contingency talks on at least one financial relief (stimulus) package, which will not be bigger than it did last spring.

Goldman Sachs estimates that a possible USD 1 trillion package will be implemented before Biden takes office on January 20. JPMorgan, which has projected 1 percent contraction in the economy in the first quarter, also estimates a 1 trillion package, at least after the end of the quarter. Everyone has predicted that the Fed will implement lower interest rates.

And fourth, the economy is still coming out of the hole.

The US economy was booming before the Covid pandemic hit. And, even a few months after the rebound, its production is not the same as a year ago. This means that the country’s capital and workers are still unused, waiting to be used. So at least the growth factors are more available than ever before. That is, there is definitely plenty of room for growth.

Even after the latest boom, gross domestic product (GDP) needs to grow by 3.6 percent to reach the same level of the end of 2019.

Economists are “notorious” for predicting a recession, but no matter what the circumstances, no one has experienced the epidemic before. It is difficult to say exactly how the economy will survive the next downturn if the number of infected and dying from Covid-19 continues to rise at its latest rate.

But the pandemic has come as a complete surprise, and one of it may be that the United States will at least be able to sustain a supply of products of public interest, despite the long-term effects and the difficult winter months for the economy.