Macroeconomy - USA
In stark contrast to the 2.1% GDP expansion in Q4-2019 and when the outlook was moderate due to the headwinds facing the US economy, the situation has since deteriorated with the US economy contracting by a sharp 4.8% in Q1-2020 and the outlook bleak in the near-term. Due to Covid-19, its quick spread across the US and the closing down of most of the country, the headwinds have now transformed into a hurricane with the eye of the storm yet to make landfall.
The shutdown is affecting almost all segments of the economy from airlines, tourism and hospitality, to manufacturing and production across industries, and to retail and F&B. The consequences of the entire economy coming to a screeching halt are significant, with supply chain disruptions, revenue collapsing, and people losing their jobs. With more than 30 million Americans filing for unemployment benefits between mid-March and early May, the unemployment rate jumped from 3.5% in February to an expected 16.1% in April – the highest level since 1939. This negative shock will have a direct and immediate impact on consumer spending, which makes up 67% of US economic output.