U.S. Should Spend Trillions of Dollars to Help the Economy

The ongoing coronavirus pandemic and how to deal with the economic impact of coronavirus remains the main topic of discussion. It will take one maybe even two years for the economy to rebound to full strength as coronavirus created a lot of problems.

Moreover, the Federal Reserve, as well as Congress, will need to spend trillions of dollars to support the economy. It is worth mentioning that, we are talking about trillions of dollars apart from the money allocated as part of the stimulus package.

At the moment, the Federal Reserve’s balance sheet already reached an unprecedented $6.45 trillion. However, according to some respondents, this number will reach $9.8 trillion. Moreover, the additional trillions will be added by the end of the second quarter of 2020.

The U.S. Congress already committed about $2.5 trillion. However, respondents who took part in the survey believe, the Congres will need to spend an additional $2 trillion.

The chief investment officer at Ardent Asset Management, John Kattar thinks the virus will largely disappear within a year. However, it will take more time to cope with structural social and economic impacts.

People should take into consideration that millions of employees lose their jobs. Despite the historic rescue package, the unemployment rate will reach 19% in August according to the respondents. Hopefully, they expect unemployment to decline to 11% by December. At the beginning of 2021, they expect the rate to fall to 7%. Nevertheless, the unemployment rate compared with the period before the crisis would be significantly higher and this a serious problem for the U.S. economy.

Economy and possible scenarios

There are numerous options as some people think that the economy will rebound until the second quarter of 2022. It means that it will take more than a year to fully recover from the crisis caused by the coronavirus pandemic.

However, some people believe the economy will recover by year-end. Moreover, there is an even more optimistic attitude among certain respondents who took part in the survey. According to them, it can happen even earlier and it is hard to say which scenario is the most trustworthy. Also, as can be seen from the information state-above there is no shortage of views about the speed and strength of a recovery.

Interestingly, on average the respondents see the gross domestic product (GDP) falling by 24% in the second quarter of 2020. Hopefully, they expect the GDP to rebound the third quarter by 4.7%. Moreover, according to respondents, the GDP will continue its path to recovery in the last quarter of 2020. However, for the full year, they still the GDP to decline by 5%. Private and governmental organizations should work together to support the economy.