By Isaac Cohen*
Who could have imagined, a month ago, that we would witness the most profound slump of the world economy in one century, that threatens to become as severe as the 1929 Great Depression. It is still premature to assess the full magnitude of the external shock delivered to the global economy by the pandemic, for the quite simple reason that nobody really knows the duration of the shutdown of a good portion of economic activity, decreed throughout the world to stop the spread of the virus.
During the last recession of 2008, at the apex, job losses in the United States climbed to 800,000 in one month. This time, the external shock caused by the shutdown of businesses, required by the quarantine, has led to massive unemployment. In the United States, during the last two weeks in March, the shutdown generated more than 10 million unemployment insurance applications. Together with estimated losses of $10 trillion in the stock market, both will reduce consumer spending pushing the economy into recession. The Congressional Budget Office projects that an estimated output loss of 7 percent, during this year’s second quarter, while on an annualized basis it is projected to reach 28 percent. https://www.cbo.gov/publication/56314
Several forecasters project that, during this year, the contraction of the US economy will be between 6 and 10 percent, therefore some foresee this may be the worst recession in modern US history.
https://www.aol.com/article/finance/2020/04/02/the-us-economy-is-entering-the-deepest-recession-on-record/23968370/
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, TELEMUNDO and UNVISION and other media.
