Economist: Coronavirus Fears Likely To Lead To Recession

March 19, 2020 - 1:00pm

Ernie Goss, Creighton University economist, said coronavirus fears have brought the U.S. economy to a screeching halt. Stocks have tumbled as a result and Goss said even with the federal government pumping cash into the economy, it’s not likely to have the impact it’s intended to.

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Economist Ernie Goss from Creighton University said the coronavirus crisis is causing a lot of trouble in the financial markets, with a 30-percent drop in value over the last six weeks. The federal government has stepped in to help small businesses and everyday Americans get through the crisis. Goss said the Federal Reserve and President Trump have reacted more quickly to this crisis compared to what happened during the 2008 recession.

“We're seeing the president proposing $1 trillion plus of support to various industries, particularly the anything connected to tourism and travel,” Goss said. “We're seeing a lot of money focus there. There's one thing that Republicans and Democrats seem to agree on in Congress, and that's spending more and they're going to be doing that and I expect to see that in the weeks and months ahead.”

Goss expects the unemployment rate to spike this month as many states around the country see more people seeking jobless benefits. In the end, Goss said, federal stimulus won’t do much to help a volatile stock market.

We economists like to think we’re in charge of all this with federal rate cuts and spending and so on,” Goss said. “But we obviously need a vaccine more than we need a rate cut. We need a vaccine, more than we need federal spending in my judgment.”

Goss said we’re likely to see a recession – with the first two quarters of 2020 having negative growth in GDP. He said the negative growth downturn in 2020’s 2nd quarter could be larger than what we saw during the Great Recession more than ten years ago.

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