During this time of the virus things are changing drastically including the economy and peoples jobs. This is mainly due to 1, the virus spreading easily and the whole social distancing aspect of it. State governors have ordered all citizens to stay at home during this time. This is very unfortunate for people that are not considered essential workers and leaves them with a at home and unfair work environment where business related things will not be done as efficient. This virus has affected many different economies including China’s. It has been recorded in China that its affected their manufacturing and services sector to an all time low along with car sales going down a whole 80%.
I believe that this pandemic has caused a major recession and contraction with our economy and its only getting worse. Millions of Americans have already lost their jobs or have not been able to work due to business being shutdown. Fortunately the only ones who are working are essential workers liker Nurse and other health care workers. Unfortunately nurses and health care workers are working extremely long shifts during this time.
Some may question why the Federal Reserve cant solve this huge economic slowdown and there are reasons for that. The main problem the economy is facing is the halt of activity due to health restrictions. Yes the Federal Reserve is very important here but its unlikely to be sufficient to the issue. In most normal economic slowdowns the Federal Reserve is the first line of defense to solve the slowdown but the Federal Reserve has already lowered interest rates to 0, began sizable purchases of assets, and has completed money injections. These are some of the things the Federal Reserve have done to attempt to counter the slowdown.
One main thing that caused this contraction was the shutting down of business and the limits on travel. Another thing is the Federal Reserve set its rates to 0 so it has run out of ordinary ammo to stimulate the economy leaving it to alternate methods. Normally the Federal Reserve stabilizes the economy by making it a lot easier and cheaper to borrow which makes consumers accelerate on investments and investing in general.
Another major issue that is associated with the federal government is the individual states themselves and their budgets. States like New York are on the front lines of this virus with trying their hardest to protect their citizens. With such an effort it has raised expenses for public safety and health which are two crucial things needed to fight this pandemic. Making sure states like New York and others have sufficient amount of resources to fight the virus is the main issue on the public health side. Additionally states cannot borrow much for certain operations that are needed right now. this forces states to raise their taxes or cut spending drastically which is a huge hurt to their economy in short term.