Coronavirus update: U.S. economy “may be” heading toward recession due to lingering virus

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WASHINGTON: U.S. President Donald Trump said Monday that the United States could be coping with the novel coronavirus disease (COVID-19) until July or August and the country’s economy “may be” heading toward a recession.

“Well, it may be,” Trump said in a press conference at the White House while responding to a question about whether the country’s economy is heading toward a recession.

However, Trump predicted growth would bounce back strongly.

“We’re not thinking in terms of recession. We’re thinking in terms of the virus,” he said. “Once we stop, I think there’s a tremendous pent-up demand both in terms of the stock market, in terms of the economy.”

Trump also released guidelines that called for people not to gather in groups of more than 10 people. The Centers for Disease Control and Prevention (CDC) earlier advised the public to cancel or postpone gatherings of 50 people or more across the nation for the next eight weeks.

“We have an invisible enemy,” Trump said. “This is a bad one. This is a very bad one.”

“This time, equity market drop is almost-certainly more consequential,” Sourabh Gupta, senior fellow at the Institute for China-America Studies in Washington D.C., told Xinhua. “During the trade war, market was volatile. Right now, it is approaching panic.”

“Market is fearing what the implications of aggregate demand cratering due to virus outbreak in economically significant parts of U.S. might mean,” he said.

Also, the market is fearing what the implications of the U.S. public health system’s significant capacity shortfalls could mean in terms of unchecked spread of the virus and its knock-on economic effects, Gupta said.

“Market is fearful that economy is already in late-business cycle phase,” he said. “Significant demand shock could tip it into recession.”

The Dow Jones industrial average on Monday collapsed 2,999 points, or 12.9 percent, to close at 20,188.52. It is the Dow’s second worst percentage loss in history behind the “Black Monday” crash in 1987.

The number of infections in the United States climbed to about 3,800, with at least 70 deaths.

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