A surge in the stock market is plaguing the US economy following the outbreak of COVID 19 ‘coronavirus’. On Friday 13th March, President Trump said that the coronavirus test would be more widely available all over the state and an arrangement to work with Google is being done. This could be achieved by creating a website where anyone experiencing potential signs of the ailment could log in and order for the test kits across the country. The citizens, on the other hand, have developed anxiety and resorted to self-quarantine measures. This has in effect, deteriorated the US economy by slowing it down. Grant Thornton, an economist, has argued that the slowing down of things is an understatement, the pause button has been pressed leading to the surge of stock in the economy.
Spending habits have changed since people tend to limit travel, public gatherings, close contact and concerts. Retail stores have recorded lower rates of stock turnover since the consumers are interested only in the basic needs with limited movements. US economy is the largest economy in the world, as a result of the travel bans and potential roadblocks to facilitate the quarantine process, is faced with the surge in stock. Workers who went for the December holiday have been stuck by the roadblocks, consequently, there is a decline in turnup in the industries and firms leading to a slower rate of production, hence the raw materials are piled up since business is not as usual.
Despite the government’s measures to control the situation, it has worsened in the first quarter of the production period, and it is predicted to shrink more in the coming months. Emergency federations have injected billions of US dollars to help contain the situation by purchasing stocks, besides, the central bank has implemented a decrease in interest rates on stock, this in turn is expected to attract investors. On the contrary, the situation is recording levels lower than the predicted and it is out of hand for months to come.
Most industries have closed down and the ones still operating are experiencing intermittent employees turn up. From the notion that, there is more to life than work, employees confidently fail to turn up despite the urgency of their services. Most people have resorted to work from home as this would facilitate the quarantine program and as well, allow them to stay with the family members at home, a privilege they have been missing. This in turn, has resulted to slow work rate and slow rate of production, consequently, the raw materials are increasingly surging up in the economy. Besides, the finished products experience delays, as well as a shrink in the market as foreign countries, are closing their borders and the COVID 19 infested countries are avoided at all costs. This in effect has led to the surge of stock in the economy of the US and the situation is expected to worsen in the coming months.
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The refrain from close contact with people has led to the cancellation of college basketball, conferences and concerts. This in effect has halted the supplies and service provision. The anxiety as an effect of Trump’s speech has heightened and the people have focused on quarantine measures to avoid contact with others to curb the spread of the virus. Industries that involve close contact among its customers are facing a great recession at the moment, Hollywood is facing hard times since the weekends which used to generate billions of dollars are faced with low turnups following the precaution to avoid public gatherings and crowded places as this would facilitate the spread of the deadly virus. Hotels and clubs have also been adversely affected by the situation; very low turn-ups have led to the stock surge as its no business as usual. Wynn Resort has opted to close its casinos and Las Vegas, a situation that took place on Tuesday by 6 pm.
A decline in the demand for crude oil has fallen. This is due to the changes in the dynamics of transport mobility, people tend to stay at home where there are fewer chances of contracting the virus, moreover, tours and trips have suddenly been cancelled and the demand for fuel has recessed. Also, crude oil prices have signaled pessimism among the people, they have opted to minimize spending as possible as they only incur costs on the basic needs hence the flop of the luxury goods and services.
Low turn-ups at the filling stations as people shy away from places where strangers with potential risks might have crossed, this is evident as some major refilling stations experience few or no consumer turn up.
From the reminisce of the 2008 crisis, the feds have opted to use government loans to minimize as much as possible, the interest rates on the stock to encourage stock purchase. The situation at china as a benchmark and the epicenter of the coronavirus, being that it is the second-largest economy in the world has indicated adversity. The streets are empty and all the retail stores closed, all operations are taking places indoors including ordering basic needs such as food. The movement of goods and services has come to a halt as the country experiences the highest coronavirus cases. Wuhan, being so industrialized and the source of the virus, has shut down all its operations and predictions indicate that, they will not be reopened any time soon and the same situation is being experienced in Italy and some other parts of the world. The US experiencing cases of corona virus-infected patients, though in fewer numbers, is not an exception either.
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The anxiety levels coupled with the remarks from Trump as the president are driving the people emotionally to the economic recession though the virus has not gained great momentum in the country yet.