by America's Largest Relief Bill
The coronavirus has left the world’s markets volatile and staggering. Aggressive actions are being taken to prevent these losses from becoming extraordinary. President Trump signed a $2 trillion dollar stimulus package into law. This is the largest relief bill that the United States has ever signed. It includes additional unemployment insurance and also will support aid to many struggling Americans. It is predicted that millions of Americans have lost or will lose their jobs due to coronavirus, but with additional aid from the government we might not see as big of an impact. It’s known now that a recession is pretty much certain so the goal right now is to limit how much damage is caused by this virus.
U.S. and European Decline in Business Activity
The central bank has hinted that they will do anything to reduce the impact created by the coronavirus. This includes extending loans to big and small businesses, backstopping funds to municipalities and purchasing hundreds of billions of dollars of government debt. The composite purchasing managers index for the U.S. dropped to 40.5 in March, a decent drop from February where it was at 49.6. This is the lowest the index has been since it was started after the 2007-2009 recession. The comparable index for the eurozone dropped from 51.6 in February to 31.4 in March. This is the lowest this index has been since it began in 1998.
We see that the service sector is being hit hard due to the coronavirus. The U.S service sector is in decline along with Europe and Japan. Japan’s service activities are the lowest they’ve been since 2007 and they hit the sharpest decline since the 2011 tsunami. U.S. manufacturing also dropped this month. A level above 50 indicated business activity growth but we see the level down at 49.2 which signals a contraction. With aggressive actions being taken everyday the markets will soon be able to stabilize and these sectors will rebound back to normal.