According to experts, the speed of recovery will depend on the actions of the government.
The American economy has been overtaken by a recession. How long it will last depend on the development of the situation with the pandemic, which can claim hundreds of thousands of lives and which has forced most of the country to introduce strict restrictive measures aimed at curbing the spread of infection.
But the speed of economic recovery will depend on how much help the government provides and how effectively this assistance will be used to save jobs, the Federal Reserve said.
“What we know from the example of 2008: when millions and millions of Americans lost their jobs, it took more than a decade for the labor market to recover,” notes Neel Kashkari, head of the Federal Reserve Bank of Minneapolis. – I am very happy that many of the actions of the Federal and state governments are aimed at helping people save jobs.”
We are talking about a new $ 350 billion small business loan program starting on Friday, which is designed to help companies pay employees ‘ salaries.
This program is part of a $ 2.2 trillion package of anti-crisis measures that Congress passed last week.
Over the past two weeks, 10 million Americans have applied for unemployment benefits, which Kashkari called a “shocking and disturbing” figure. His wife, who worked for a corporate travel Agency, also joined the ranks of the unemployed.
According to Kashkari, if jobs remain assigned to employees, the recovery can go faster, because it will be easier for companies to start over.
If the company will not be able to re-open and keep its employees, thousands of businesses will go bankrupt, which will lead to a much longer recovery.
The head of the Federal Reserve Bank of Dallas, Robert Kaplan, in an interview with CNBC, also noted that the economy is in the stage of “sharp contraction,” and the unemployment rate may reach 10-15 percent.
At 15 percent, 24 million Americans will be out of work. In February, the unemployment rate was 3.5 percent, and the peak rate, 10 percent, was reached during the great recession.
“We know that due to the restrictive measures, both the service sector and the consumer will have a harder time,” Kaplan said, referring to the decrees issued in most states that require people to stay at home and close all establishments that are not classified as essential.
Although Kaplan believes that unemployment will fall to about 8 percent by the end of the year, he warns: “It will take a lot of work to achieve this.”
Anti-crisis measures, including the aid package adopted last week, play a key role in this, but more fiscal measures will be needed, he said.