Coronavirus continues to have a strong impact on the American economy. The Fed is keeping its interest rates near zero in order to provide continued support during the slowdown. It has indicated that it plans to keep its rates low until the U.S. has passed this economic storm and people are working once again.
In the past quarter, the U.S. economy has contracted by 4.8%, and it is the largest economic contraction seen since 2008. The decline is believed to be caused by a slowdown in personal consumption, which has been reduced by 7.6%. It may be worse in the second quarter – but only if the country remains closed.
Meat Processing Plants
In the past couple of weeks, several large meatpacking plants have closed due to coronavirus. The rates of infection were often higher than in the surrounding communities and in at least one state, the plant had more cases than the rest of the state. The closed plants process pork, chickens, and beef.
The closure of these plants, which produce a large portion of meat in the U.S., has resulted in the slaughtering of millions of animals because the plants did not have enough workers to process them. It has led to rumors and fears of meat shortages in the very near future. President Trump has ordered that the plants stay open and the order gives employees who are fearful of coronavirus the option of going to work or not.
A federal grand jury investigation continues to look into the troubled aircraft manufacturer. Boeing is now facing possible criminal charges and scrutiny over the problems with the 737 Max aircraft. Multiple lapses in quality control were discovered in investigations that have since resulted in aircraft crashes and the grounding of the aircraft worldwide because of multiple problems. It will likely result in increased government oversight in the company’s assembly lines. News of the findings resulted in a fast drop in Boeing stock.
The vaccine created by Gilead (remdesivir) has shown some positive results and it is ready for further testing. The testing so far was conducted on people that already had pneumonia. Most patients (64 percent) had shown improvement within 14 days and many of them (61 percent) were discharged from the hospital.
The treatment revealed that a five-day treatment was as effective as the ten-day treatment. Better results were obtained when patients were treated early (within 10 days after symptoms appear) rather than late. When news of the success of these trials was reported, the stock market rose.
The Stock Market
The stock market has shown some gains today in the big three – Dow Jones, NASDAQ, and S&P 500. Many oil companies are at risk of having to declare bankruptcy because of the oversupply of oil – and no place to store it. Gold continues to show solid value and it is largely unaffected by the economic downturn except that it continues to gain in value.
When the country can open safely is still uncertain. Reports are increasing that other countries opening too soon are showing a recurrence of new waves of COVID-19. It also appears that the virus may be airborne. More daily testing is required before greater control and reduced deaths will occur.