Corona Shrinks The US Economy

In a recent article, the Federal Reserve Chairman Jerome Powell has stated that the Federal Reserve (Fed) is not considering raising interest rates at this time. They are only thinking about providing support for the economy because the economy may take some time to settle out and recover. That is some good news for mortgage interest rates and credit card interest. Now could be the time to refinance your home and or negotiate the interest rates on your credit cards to pay down your outstanding balances.

Here is the downside. The Fed's projections show the US economy will shrink around 6.5% in 2020.  Next year's projections for the year 2021 show an increase in the growth of the economy.  Do keep in mind this is only a projection or prediction based on the information that is available right now.  This could be subject to change if other events occur. Currently the US economy is in a recession with millions of people unemployed.  There has been some people that have returned to work or gotten other jobs which has helped reduce the number of people unemployed.  However, the road ahead for economic recovery from the corona virus shut down will take some time to return to pre- corona virus level employment.

The percentage number of people n the United States that are unemployed are very large. No one can accurately predict when the economic recovery will take place. There have been numerous businesses that have filed bankruptcy for reorganization, total shut down, or just called it quits and won't be opening their doors anymore.

The number of commercial spaces, office space, retail, and restaurant space available for rent is on the rise.  The direct result of an economic slow down. These spaces may not have any tenants for a long period of time. The reason being that the fear of the virus or a new virus will make a lot of people hesitant to shop, dine, and work in offices going forward from this pandemic.  There is a strong possibility that the shift may be permanent.

Key points:

The Federal Reserve voted Wednesday to keep benchmark short-term rates near zero.

In addition to the rates move, the Feds said it would keep buying bonds, targeting $80 billion a month in Treasury's and $40 billion in mortgage-backed securities.

On the economy, the Fed sees GDP tumbling 6.5% in 2020 but bouncing back to a 5% gain in 2021.

cited sources:

https://www.cnbc.com/2020/06/10/fed-meeting-decision-interest-rates.html

https://www.heraldnet.com/opinion/comment-one-month-of-good-economic-news-may-not-be-enough/

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