Question

Based on the unemployment rate in the United States, assess the severity of the COVID-19 recession. And discuss the federal government's response.

Answer 1

The unemployment rate in the country is said to go very high to about 20 percent. The situation seems to be very similar to that of the Great Depression but the country will be able to deal with this situation better as they have knowledge about the economy. The unemployment situation seems to be worsening because of the social distancing and the lockdown which has led to the closure of many businesses. It is said that the US is entering another recession and many economists believe that this would be one of the worst recessions.

The Fed has said that they would do anything to ensure that the economy does not collapse because of the pandemic. Fed has lowered the interest rates which will encourage businesses to borrow. The Fed is also trying to regain the investor confidence by buying government assets. Along with this, at present, the fiscal policy is making policies which will cushion the blow to households and businesses.