Archive

Archive for May, 2020

Federal Reserve Chairman Jerome Powell Warns U.S. Economy May Contact By 30 Percent

May 18th, 2020 Comments off

In an interview with the CBS news magazine 60 Minutes, the Fed Chairman warned that the American economy could “easily” contract by 30 % in the current quarter. He also told the interviewer that the U.S. unemployment rate could peak at 25 %.Though the Fed chairman tried to put a positive spin on his message, using such rhetorical phrases as his “never bet against the American economy,” the reality Powell presented minus the spin was anything but rosy.

Even the Fed chairman’s prediction that economic growth would resume in the second half of 2020 was conditioned by developments on the health front, and that a full economic recovery required the development of an effective Covid-19 vaccine.

The Federal Reserve is clearly worried about a full-blown depression, a prospect that is increasingly likely. In fact, there is a growing consensus that a possible short-term recovery will be followed b y a sustained economic depression, transforming the global health crisis engendered by the coronavirus into the Global Economic Crisis of the 1920s.

 

Global Risk Expert Ian Bremmer States World Economic Crisis Has Reached Initial Stage of a Depression

May 12th, 2020 Comments off

Political scientist and noted global risk expert Ian Bremmer, who is president of the consultancy firm Eurasia Group, in a recent podcast indicated that in his view the world is now headed into a severe economic depression. He indicated in his podcast that while a uniform  formal definition  of an economic depression does not actually exist, the statistics of economic destruction emanating from the Covid-19 pandemic exceed the parameters of a recession.

Ian Bremmer pointed out in his podcast that a technical recession is defined as two quarters of consecutive negative economic growth. A depression would mirror the coronavirus  pandemic in that it has far greater depth and duration than a normal event. The global health emergency generated b y Covid-19  has resulted in a level of economic shutdown and contraction throughout  the world that far exceeds the formal definition  of a technical recession.

Though there is resistance at the early stages of this new Global Economic Crisis to label it a depression, Bremmer points out that there was also hesitation  towards labeling the coronavirus outbreak a pandemic in its early phases. The noted political scientist is convinced that we are entering the first  new economic depression in nearly one hundred years. Ian Bremmer also believes the world of the 21st century is stronger financially and economically than was the case with the Great Depression of the 1930s. This is the only positive insight he offered, in what was otherwise a prediction of economic doom and gloom.

U.S. Job Losses Top 33 Million In Just Seven Weeks

May 8th, 2020 Comments off

The just-released U.S. Labor Department report shows an addition 3.17 million American workers filed jobless claims in just the past week. This means that in a period of only seven weeks the U.S. shed 33.5 million jobs due to the Covid-19 pandemic. The employment picture in the United States is utterly dismal, with no end in sight to the contraction of employment numbers. Though there is wishful thinking on “reopening” the American economy, the reality on the ground shows freefall economic collapse engendered by a health crisis, with no short-term-term solution in sight, except continuation of the slowdown of economic activity.

The news from Europe is equally dire. The Bank of England is forecasting that the UK economy will contract in 2020 due to shutting down economic activity in response to  the coronavirus by  14 percent. According to the Bank of England, this is the nation’s worst economic contraction in three hundred years. In the Eurozone officials forecast a rate of quarterly economic contraction of 7.5 percent.

A global recession  is already underway, at an intensity far beyond that of the 2007-09 Global Financial Crisis. The current Global Economic Crisis created by Covid-19 suggests that a severe global depression is an increasingly likely prospect for the world.