Coronavirus: the historic US aid plan for the economy, and what next?

Text by: Agnieszka Kumor

Oil prices as well as the stock markets reacted favorably to the support measures for the American economy. The Covid-19 crisis prompted the United States to reach a historic agreement on a gigantic $ 2 trillion support plan. But will it be enough? Experts wonder.

Publicity

While the world's largest economy has probably already entered into recession, these support measures will mobilize around $ 2 trillion. Sunday March 22, Steven Mnuchin, the Secretary of State for the Treasury, hammered on Fox News Sunday the will to put on the table 4,000 billion dollars to support paralyzed sectors in the United States. Ultimately, it will be half. The task is immense.

Helping businesses and households

This is to help companies so that they can continue to pay their employees, but also so that they are ready to restart after the crisis. The US Central Bank, the Federal Reserve, should be involved and lend to small businesses.

The measures also include money for hospitals and direct aid to American households, which will touch $ 1,000 per adult and $ 500 per child.

The specter of recession

The American president estimates that a prolonged confinement of the population could destroy the country, and that " a serious recession could make more victims than the virus ". Thus, Donald Trump hopes that the country " could reopen by Easter ". But according to his opponents, it is precisely the lack of strict containment measures that risks precipitating the country into recession. If it is not done yet.

According to the scenario developed by the Oxford Economics research firm , the impact of the coronavirus pandemic on economic activity has already tipped the United States into recession. Oxford is now counting on stagnation in the gross domestic product (GDP) of the world's leading economy this year, when it previously forecast growth of 1.7%. " We anticipate a total loss of GDP of 350 billion dollars (320 billion euros) in 2020 and the loss of about one million jobs, " added the British research firm.

The Saint-Louis Federal Reserve goes further in its estimates. "As many as 46 million people could find themselves unemployed in the short term in the United States, " said James Bullard, chairman of the St. Louis Federal Reserve, one of 12 regional banks supervised by the Fed. " These are people whose job involves interaction with the public and that is exactly what our health authorities do not recommend, " he added.

A violent shock to stem the crisis

Admittedly, the confinement of the population destroys the economy, but the coronavirus destroys it just as much, notes Véronique Riches-Flores, independent economist and founder of RichesFlores Research . When a country enters total containment, it is between 60% and 80% of the activity that stops, she explains in an interview with RFI. " In a country like the United States, where there is little social protection, this paralysis could very quickly translate into an economic and social crisis that would risk generating measures unprecedented since the 1930s ," said the economist. Unfortunately, you have to go through this violent shock to limit the spread of the coronavirus, and also to limit the economic damage that goes with it. "

The 2,000 billion dollars put on the table by the American authorities constitute considerable sums, but this will probably not be enough to stem the crisis. “ Besides, this is not an economic recovery plan, it is a rescue. We are filling gaps. And we try to avoid the hemorrhage leading to an overly deep crisis. The strength of the American economy is large groups, of course, but also and above all small businesses. American SMEs with often faltering financial health. " For a large majority of them, it is impossible to last more than 10 days without turnover," notes Véronique Riches-Flores. We fear that a backdrop of this crisis will come from these small businesses. It will be imperative to help them to avoid bankruptcies. But we will also have to put money into the social aspect, ”she concludes.

And the worst still seems to come for the Americans. The pandemic has spread globally from China to Europe and the United States, and therefore from east to west. There will therefore be a slight time lag. The size of the United States also plays a role. To which is added a late awareness. “ It is for all these reasons that the peak of the crisis could arrive in the United States in June. And its extensions could play out beyond the summer, ”thinks Véronique Riches-Flores. Everything will depend on the development of the Covid-19 across the Atlantic. However, according to estimates by the World Health Organization, the United States may soon overtake Europe in the number of people infected.

Our selection on SARS-CoV-2 coronavirus

• Listen to Infos coronavirus , our daily column on the Covid-19

• An infographic: The coronavirus in 7 points

• Practical questions:
→ What is the lifespan of the virus?
→ Who are the vulnerable people ?
→ What should you do when you think you are contaminated ?
→ Quarantine, what are we talking about ?
→ What treatments ? The effectiveness of an antimalarial drug in question
→ The advice of a psychiatrist to live well confinement

Find all our articles, reports, chronicles and programs on the coronavirus by clicking here .

Newsletter With the Daily Newsletter, find the headlines directly in your mailbox

Download the app

• United States
• Coronavirus
• Donald trump

On the same subject

US agrees on "historic" economic stimulus package

International reporting

United States / Mexico: asylum-seeking migrants stranded at the Mexican border

PORTRAIT

United States: Who is Anthony Fauci, the researcher appointed by Trump to fight against the coronavirus?