On what factors the U.S. economic recovery depends on
The coronavirus pandemic and declining global demand have severely hit many markets, including the United States. This situation has shown the fragility of the system and the need to improve it. Experts say that the recovery of the U.S. economy may be slowed down by crisis phenomena that have been observed for several months.
According to the forecast from the Federal Reserve analysts, the progress in the USA is slowed down by the recession in Europe, as traditional trade processes are disrupted. Without them, it is difficult to talk about rapid economic recovery.
The world market also has an impact on American activity. Decreasing demand and restrictive measures do not allow U.S. business to fully function and increase turnover. The Fed specified that in order for positive dynamics to appear as soon as possible it is necessary to increase trade volumes of all kinds regardless of the industry.
Another important point is tourism, which has also made a significant contribution to the country’s budget. During the quarantine, the flow of travelers from Europe has almost disappeared, and more time is needed to restore them. In addition, the purchasing power has decreased. Therefore, many tourists have refused to travel this year.
The recession and slowdown in markets around the world is somehow affecting the U.S. economy. The pandemic has caused a serious crisis on a global scale. While in April World Bank analysts talked about a 3% slowdown in the global economy, in June the forecast was revised and announced a decline by 5.2% before the end of this year. According to experts, the current recession will be the most severe since World War II.
However, the White House is more optimistic. They are confident that the country’s economy is recovering quite quickly, and has experienced a short period of decline, and is now confidently gaining momentum. Therefore, it is safe to say that growth processes will accelerate soon. However, the Federal Reserve experts do not agree on how quickly the economy will recover and when the signs of recovery will be felt.
On the U.S. stock market there is a fluctuation of major indices. Last week, the industrial indicator Dow Jones decreased by 0.77% and S&P 500 – by 0.54%. Exchanges are acutely responding to the slightest change, many participants are afraid of a second wave of pandemic, others have not yet recovered from the first wave. Everybody is afraid of new restrictions that will freeze the economy again, and investors are not in a hurry to make major deals. The uncertainty of the market is forcing them to hold on to their assets until it is clear where to go next and what areas can be considered promising.