US Fed Moves To Rescue The Economy And Fend Off Global Recession

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The outbreak of the corona virus is threatening to push the United States and the world economy into recession. The Federal Reserve is trying to get enough money to rescue the economy. It is striving to keep the financial market afloat and accessible to everyone.

NPR reported that the Fed has bought over $1.2 trillion treasurys and mortgage-backed securities. Moreover, the central bank has declared that it will keep buying as much as required so that the credit markets won’t seize up. Additionally, the Fed will start giving out loans directly to corporations, and it is planning a main Street program so as to give financial help to smaller firms.

central bank’s unlimited hard work

Greg McBride, the Chief Financial Analyst for has stated that the Federal Reserve is trying its best to contain the health crisis before it causes an economic recession. Even though credit is not as easy as to come across as before, the Fed had helped in preventing financial crisis. However, the question whether Central Bank will give out their help to small businesses who have lost customers due to the corona virus outbreak is still unanswered.

Furthermore, the Central Bank has spent a lot of money especially since it reduced its interest to almost zero. However, Jerome Powell has stated that he and his colleagues still have the upper hand.

Businesses are shutting down and people are becoming unemployed, and Powell has said that they are ready to give out loans to those ones that need it. It was predicted by Goldman Sachs that the United States will contract at an annual of over 30% in the upcoming 3 months. This is caused by the outbreak of covid-19.

The fact that people asked to leave work and practice social distancing is giving rise to recession. However, that is the only way to reduce the spreading of the disease, and it’s only after the disease is under control that the threat of recession will go down. Moreover, Powell said that if they are able to contain the disease quickly, economic activity would return.

The Fed is doing so well in maintaining the economy, and so much better than the last financial crisis over 10 years ago. J.P. Morgan’s chief United States economist, Michael Feroli said, “It’s kind of crazy how they’ve almost done as much in this week as they did in several months in 2008.”

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Earlier Reports On The Fed

On march 23, CNN reported that the Fed had planned on buying corporate bonds to stabilize the financial system and contain the health crisis. It had also planned in making a special purpose vehicle to buy corporate bonds funded by the treasury. Moreover, it said that the bonds must have a maturity of at most five years.

Also on March 23, the New York Times, NYTIMES reported that, Nellie Liang who is a senior fellow at the Brookings Institution and a former said, “You can’t prevent some of the losses that are occurring. You want to make sure that at the end of the period where the economy is affected by this crisis and shut down, that you haven’t left everyone in such a bad place that you can’t recover quickly.”

However, the Fed has proven to fend off global recession. As mentioned earlier, it has even done so much more than it did dozen of years.

US, China 2020 Global Recession Fears As Coronavirus Shuts Down Stuttering Chinese Economy

2020 Global Recession Fears As Coronavirus Shuts Down Stuttering Chinese Economy

Chinese authorities have acknowledged the impact of the coronavirus epidemic on economic and social development.   It has alarmed China’s economic growth as worries mount over the coronavirus’s effect on the economy, unemployment, and global supply chains.  It is unavoidable that the novel coronavirus epidemic will have a considerable impact on the economy and society, and coronavirus affecting China is plunging the entire world into a global recession like happened in 2008.

 It is unavoidable that the novel coronavirus epidemic will have a considerable impact on the economy and society, and will destroy businesses and livelihoods in China, the US, Asia,  North America, the UK, Germany, the EU, and almost everywhere around the world. It will also impact technology companies’ stocks, e.g., Facebook, Amazon, Apple,  Microsoft, etc.

The virus, which has claimed the lives of more than 2,500 people and infected more than 77,000 in the mainland, is the most significant public health crisis to hit China and another part of the world. Containment measures which include mandatory quarantine for workers, partial shutdowns of factories, and transport restrictions, have caused significant disruptions to the economy, which was already growing at record low levels before the virus outbreak.

These low-risk zones, along with areas with only a small number of infections, should “comprehensively restore production” and 2020 Global Recession Fears As Coronavirus Shuts Down Stuttering Chinese Economy.

 Medium-risk zones should recommence production in an “orderly manner,” while the priority for hard-hit areas like Hubei, the province at the center of the outbreak, was still containing the virus. Coronavirus: Wuhan, the city at the epicenter of the epidemic, marks a month under lockdown

 A crucial part of the vision is doubling the size of the economy from 2010, which economists say will require minimum gross domestic product (GDP) growth of 5.6 percent this year. As long as we can turn the crisis into an opportunity to restore production and social life in an orderly fashion, we will be able to achieve the economic and social development goals set for this year.

It was universally reported that the government had set China’s GDP growth target at “around 6 percent” for 2020, although the official number was never published. The growth target and several other critical economic goals were expected.


Coronavirus & Its effect on Economy
Image from Wikimedia

While authorities are ramping up efforts to kick start the economy at home, some observers have raised concerns about the long-term effects of China’s position in the global economy.

The medium- and long-term impact of the coronavirus has increasingly become a concern, especially whether the coronavirus will dampen the global supply chain or weaken China’s international role.

China must ensure the smooth operation of “the industrial supply chain for foreign trade” and “stabilize its share of the global market.

China’s manufacturing supply connection pummelled from all sides in efforts to restart

Coronavirus costs keep rising for manufacturers, who are facing huge losses in sales and struggling to ramp up production. Logistical logjams persist as transportation networks struggle to find workers and navigate lockdowns across China.

Choked off of workers, logistics, suppliers  and networks, China’s production base is facing a multitude of unprecedented challenges, as coronavirus containment efforts hamper factories’ attempts to reopen.

Many of those that have been granted permission to resume operations face critical shortages of staff, with vast swathes of China still under lockdown and some local workers afraid to leave their homes. Others cannot locate the materials demanded to make the products, and even if they could, the shutdown of shops and marketplaces around China means demand has been sapped.