Question

Predict the economic consequences of the spread of the COVID-19 on the economy of the United States in terms of (1) Gross Domestic Product (2) Consumption, (3) Investment, (4) Inflation, (5) The labor market, (6) The business cycle, and (7) The financial System. Just opinions do not count. Please use actual Macroeconomic concepts. Formulas, graphs, etc are welcome :)

Answer 1

Effect of Covid-19 on US economy-
1)GDP- Covid-19 has effected America's biggest cities .Almost 140000 Americans are confirmed of this deadly virus.Covid -19 has hit the US economy ,it has effected different industries of US.70% of gdp in US is made up by the consumption itself only but due to this lockdown,all the businesses are closed.Households are not spending much because they are worried about their finances and jobs.Other areas like theatres, restaurants etc constitute 4.2% gdp earlier but now this figure is close to zero because everywhere it is shut down and earnings are nill.Manufactring industries were contributing 11% but now even this sector has stopped all the manufacturing and production and closed their car factories temporarily.
2) Consumption- Covid -19 has a great impact on the consumption of United States, as households are not spending the way they used to earlier because fear of losing jobs have made them not to spend much.On the other side consumption on regular goods have increased . People are stocking the food essentials as they really have no idea how long the lockdown will continue.
3) Inflation-US will have high impact on their exonomy because demand will collapse in the market ,as no jobs will lead to no income , which further will lead to no spendings.Thus the situation will lead to Depression.Earlier in mid Jan and Feb, there were unexpectedly rose in the prices of goods but now it is falling due to the severe impact of covid-19.Morgan Stanley has expected there will global recession in the first half of 2020.
4.Investment-When the stock markets are crashing , one thing is coming in mind whethere there will be an investment or not .So the first thing is important to consider that how much amount of cash is there in hands and also it is difficult to drawn out the money when the stock market is crashing,So investing when the future is unknown is not a good idea.So even investors are not trying to spend in the market and do not want to take unwanted risks.
5)Labour market- Covid -19 has almost taken 47 million jobs of people in USA.Millions of Americans have already lost their jobs . Unemployment rate has translated to 32.1%.
6)Business Cycle- has gone upside down.The whole cycle has disturbed. As reduction in consumption rate has led to decrease in production .No production means , no gdp growth in an economy .Covid-19 has higly impacted the trade cycle.