Numbers: The collapse of the US economy due to COVID-19 is becoming more and more evident day by day, the latest sign of a record 6.7% drop in key economic indicators in March.
The closely followed index, published by the U.S. Council Board, measuring the country’s economic health tracks 10 indicators, most of which showed sharp deterioration in the past month. New job applications, for example, registered a record increase and share prices fell.
The sharp drop in the 60-year index broke the previous record of 3.4% in October 2008, when financial panic plunged the United States into its deepest recession since World War II.
The drop is almost certain to be even worse in April – probably much worse. The economy did not begin to close until the second half of March, as states and the federal government intensified their efforts to slow the spread of the coronavirus.
“The recession, if you hadn’t guessed it,” said Scott Brown, chief economist at Raymond James.
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What happened: The leading economic index showed deterioration in the economy at all levels, the Conference Board said Friday.
The board of directors predicted that the economy would contract by as much as 7% in 2020 in light of all the damage caused by the viral epidemic and the unrestrained efforts to contain it. A record number of 20 million Americans have already applied for unemployment benefits.
Big picture: The US economy is suffering a lot, as is the rest of the world, and a global recession is already here. Its duration and worsening depend on the ability of nations to slow the spread of the virus.
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President Trump proposed guidelines on Thursday for how the economy can reopen, but it will take months, if not more, before things start to show a semblance of normalcy.
What do they say? “The unprecedented sudden deterioration was widespread, with the largest negative contributions coming from initial unemployment insurance claims and stock prices,” said Ataman Ozyildirim, senior director of economic research on the board of directors. “The sharp drop in LEI reflects the sudden cessation of business activity following the global pandemic and suggests that the US economy will face a very deep contraction. “
Market reaction:Dow Jones industrial average
and S&P 500
rose in the Friday trades after reports that a drug in the trial to treat COVID-19 has shown positive results. Lily:Dow stands up as investors hope for treatment for Gilead coronavirus and reopening in the United States.
10-year Treasury yield
slipped to 0.62%.