April Economic Update
Over this past month, our daily living standards have been turned upside-down as the world attempts to slow the spread of the COVID-19 Coronavirus. The economy has understandably sustained a hit, with most Americans sheltering down in their homes and avoiding social contact with others. Although this is a bleak time for all, it is important to start thinking towards the future and the recovery ahead. We will unquestionably experience more volatility in the coming months in the stock market as the economy eventually begins to rebound from this sudden shutdown.
Government & Federal Reserve Policies
Both the Government and the Federal Reserve have taken drastic and historic measures to provide aid to Americans and businesses during this time. At the end of March, the CARES Act was signed into law, releasing $2 trillion in relief to millions of Americans and U.S. businesses. This includes $1,200 checks to American taxpayers ($2,400 to married couples) and four months of additional $600 payments to those claiming unemployment. (1,2)
For the first time since 2008, the Federal Reserve lowered interest rates twice last month, beginning with a half percentage cut on March 3, and a full percentage point on March 15. The Fed has also begun to purchase distressed debt assets and has injected more cash into the markets as the demand for the dollar had sky-rocketed over the course of the month. (3)
All these measures have been implemented to keep our financial system functioning and to aid Americans who may have lost their ability to work during this time. While these steps will provide short-term relief, further measures will likely be needed in the months ahead to assist in the recovery efforts.
China, where the first widespread outbreak of COVID-19 occurred, has recently reported a considerable drop in cases (though, it is difficult to verify their numbers). Many experts, both in the financial and medical fields, are keeping a close eye on the rate of recovery from the countries where the first outbreaks occurred in order to better gauge a recovery timeframe for the United States.