American economist Alan Blinder, who is a former Federal Reserve vice chairman and now a professor at Princeton, says that USA might be already in recession due to the fear-induced economic slowdown from the coronavirus. He said:
“I wouldn’t be one bit surprised if when we look back at the data, it is decided … that the recession started in March. We won’t know that. It takes months to get the data that would be relevant to a call like that. But it wouldn’t be a bit surprising to me.”
Today, the rules of economics define recession as two consecutive quarters of negative economic growth. However, some other measures that considered are include dramatic changes in the unemployment rate. Ultimately, the National Bureau of Economic Research (NBER) is the arbiter. The Great Recession was deemed to have started in December 2007, but was declared a year later.
Talking about the “fear of shopping” and fear of being in public places where the COVID-19 strain can be spread causing economic downturn, Blinder said:
“You can understand why people don’t want to go to restaurants, shopping malls, not to mention travel. Spending on all of those categories has probably plummeted and much faster than our system catches it.”
However, the economic data gathered recently creates hope. Due to a sharp drop in mortgage rates, housing sales and refinancing have been on the rise. The American economy added another 273,000 jobs in February. The Atlanta Fed has tracked first-quarter GDP growth at a robust 3.1%. The Citi Economic Surprise Index measures the data against Wall Street estimates. It is now peaking at its highest level in more than two years.