The coronavirus has led to social distancing, which has caused millions of Americans to be displaced from work. With so many workers displaced and unable to pay their bills it could lead to social unrest. President Trump recently predicted suicide by the thousands if people are not put back to work:

Compounded by the fact that millions are displaced is the $2 trillion stimulus package congress gave to corporations. This is on top of the trillions in stimulus the Obama administration gave to Wall Street and the investor class. At some point main street will figure the U.S. is a failing empire. Ralph Baker’s Shock Exchange: How Inner-City Kids From Brooklyn Predicted the Next Recession and the Pain Ahead predicted the U.S. was a house of cards. Once that house fell, social unrest would follow.

Policymakers have braced themselves for poor economic data. More than three million Americans filed unemployment claims last week:

More than 3m Americans filed a claim for unemployment benefits last week, a record high that offers the first nationwide picture of the damage to the US economy from the coronavirus shutdown.

According to data released by the labour department on Thursday, claims rose to 3.3m for the week ending Saturday, from 282,000 the previous week. The data eclipsed consensus expectations of 1.7m, showing the staggering scale of job losses in the first full week of claims since cities and states began to restrict public gatherings and, in some cases, ordered residents to stay home.

“Nearly every state providing comments cited the Covid-19 virus impacts,” the labour department said on Thursday. States reported hotels and restaurants had been hit particularly hard, as well as entertainment, transportation, manufacturing, and healthcare and social assistance.

Social distancing is needed to hopefully arrest the spread of the coronavirus. Once the number of new cases peak it could provide hope that we are making progress. Policymakers have practically put a moratorium on gatherings of large crowds. That has hurt cruise lines, casinos, retailers, air travel and companies that engage in live events. It is rare that a country practically stops all business activity. GDP is expected to free fall next quarter. Goldman Sachs (GS) estimates Q2 GDP will fall 24% due to negative effects of the coronavirus. Such a decline would put the U.S. economy into recession.

 

print

LEAVE A REPLY

Please enter your comment!
Please enter your name here