Coronavirus impacts
all aspects of the
U.S. economy 

The longest economic expansion in U.S. history ended sometime in the first half of March. Severe efforts to combat the spread of the virus impacted the economy. The mandatory closure or restriction of businesses, coupled with voluntary pullbacks in typical consumption patterns, are causing a massive retrenchment in economic activity.

Initial unemployment claims leaped by 70,000 in one week to their highest level since 2017. Regional manufacturing surveys showed already declining activity, with some showing the weakest readings since the early stages of the recovery the Great Recession. And retail sales faltered in February, even before the forced closure of retail stores and retail-related businesses around the country.  

Expect data released over the next few months to seem odd – either too backward-looking or incredibly severe. Some of the data points, including those for the labor market and consumer spending, could show unprecedented severity. The health crisis also diminishes the importance of many routine data releases.

The Fed continued to announce widening measures to support the economy and ensure the functioning of financial markets. The Fed will keep widening its balance sheet as necessary rather than commit to a specific amount. This includes the purchase of corporate bonds for the first time ever. It also announced three new emergency lending programs: two aimed at the corporate credit market and one intended to enable the issuance of asset-backed securities. It will also announce a program to support small and medium-sized businesses. 

The government agreed to a fiscal stimulus package of roughly $2 trillion. The plan includes direct payments to individuals, small business loans, and assistance for struggling industries. While no panacea, it should provide some much-needed support to the economy.