In the second quarter of 2020, the economy of the United States may collapse by almost 38% in annual terms. Such a forecast was made in the management of the US Congress on the budget. The coronavirus pandemic and quarantine restrictions hit the US services sector and triggered skyrocketing unemployment. To support the public and business, authorities have already approved several financial assistance packages. At the same time, experts believe that the actions of the American leadership do not stimulate the economy enough and lead to an increase in public debt and budget deficits.
From April to June 2020, United States GDP may decline immediately by 37.7% in annual terms. This is stated in the report of the Office of Congress on Budget (CBO).
According to the agency, economic activity in the country will begin to recover only in the second half of the year, but at the same time, the overall dynamics for all 12 months will remain negative. So, by the end of 2020, US GDP may decline by 5.6%. The last time such a serious drop occurred back in 1946, according to the Federal Reserve Bank of St. Louis.
The main reason for the record economic collapse, American experts call the consequences of the COVID-19 pandemic. Currently, the United States remains the leader in the number of coronavirus infected. At the same time, the introduced quarantine restrictions provoked a massive reduction in trade and passenger traffic, as well as the closure of companies and industries.
“The pandemic and social distancing measures necessary to contain it caused massive damage to economic activity, triggering a wave of rising unemployment and interrupting the longest boom since World War II,” CBO economists say.
According to RT, BKS Broker stock market expert Albert Koroev, in the first place, the pandemic hit the American services sector. According to the World Bank, the sector accounted for over 77% of US GDP in 2017.
“In many ways, the country’s economy is focused on the services sector and the consumer sector. Now there is a dramatic decline in consumption, ordinary Americans are starting to save, which translates into huge losses for small and medium-sized businesses. Under these conditions, according to our forecasts, the recession will continue until the advent of the vaccine against COVID-19, ”RT Koroev said.
Moreover, the current situation in the American economy is exacerbated by the growing demographic crisis. This point of view in a conversation with RT was expressed by the head of the analytical department of AMarkets Artyom Deev. According to him, the number of people over 65 in the United States is growing rapidly and in the next decade may exceed the number of working youth.
“In the past five years, the so-called pension crisis has progressed in the United States. The number of employees is reduced, and the number of pensioners is growing, which leads to an additional burden on insurance funds. Moreover, even before the pandemic, the medical healthcare system was operating at its limit, and now it is objectively unable to cope with the influx of patients, ”the expert notes.