Arlington Capital Management as markets are preparing for an economic slowdown, many questions are being asked. Quite frequently, causing brand managers to realize the need for taking a more agile and also proactive stance. They have to prepare to dramatically transform. Their strategies to secure growth and also achieve success, not only for the current moment but long-term.
As per Bbc.com, the US economy has contracted an annual rate of 32 percent. Between April 2020 and also June 2020, as the nation has been struggling. With spending cutbacks and also lockdowns during the COVID-19 pandemic. The US economy has witnessed its sharpest contraction in decades.
Some FAQs by Arlington Capital Management Experts
Q. How did COVID-19 trigger a recession in the United States’ economy?
A. The economy of the United States has entered a stage of contraction. There has been a substantial increase in unemployment insurance claims. We know that millions of American citizens have become unemployed due to coronavirus pandemic. At a much faster pace compared to the job losses triggered by the Great Recession. The current transmission of the COVID-19 pandemic across the globe has ended up reducing consumer demand and complicating supply chains. Moreover, a dip in equity prices would reduce household wealth, leading to a dramatic slowdown of the economy. The United States is set to witness. One of the worst and sharpest economic contractions. The experts at Arlington Capital Management believe that the most common question. What follows is, “how fast can limitations on activity be lifted?” and “can the US economy swing back into action like before?”. Everything depends on the basic policies’ responses.
Q. Are the federal reserve’s monetary policy tools adequate for sustaining the economy?
A. The key issue the economy faces is not any shortage of liquidity, but ceasing activity. Temporarily due to health limitations and also solvency for several individuals and also organizations. Hence, the Federal Reserve’s activities are crucial but not likely to be sufficient. In numerous economic contractions, safety, and also defense. COVID-19 has already reduced interest rates to zero and also started making substantial. Purchases of valuable assets with liquidity injections into the financial markets. These proactive steps are very critical but cannot safeguard the US economy from extensive damage.
The lockdowns and also limitations on travel have already caused shrinkage in the overall economic activity regardless of policy. Since the Federal Reserve already has reduced rates. They are running out of the traditional ammunition to effectively stimulate the economy. Tools such as forward guidance or asset purchases as the Federal Reserve helps. To restore the US economy simply by making borrowing significantly. Less expensive and also easier, motivating consumers and also firms to speed up purchasing and also investment decisions. For this situation, the outcomes of the coronavirus pandemic are very much unknown. Making it doubly difficult and also dicey for organizations to borrow, irrespective of rates.
Q. In what way could the fiscal policy be helpful to the economy?
A. The current chief objective of the fiscal policy should be to effectively cushion the intense downward shock. And also establish the right conditions for the economy. So that it is able to bounce back to normal once the restrictions. And also limitations on economic activity. Are withdrawn. With time, it is strongly advised. That you consider utilizing the fiscal policy to restart the economy.
We have dealt with the top three concerns but many more questions still need to be answered. Hopefully, you now know that certain proactive measures need to be taken to achieve. An economic boost post coronavirus pandemic.