Today’s crisis may weaken the US economy, RISS expert Pavel Zakharov says. "It turns out that the American leadership is unable to overcome the healthcare and economic challenges. The US may lose its position as a global hegemon, and China will strengthen its influence across the globe," he added. The high cost of medical care in Washington and the fact that the majority of the population is overweight further complicate the US combat against the virus.
Washington has the huge financial resource that the state will spend on infected COVID-19. In late March, the $2 trillion economic stabilization package was agreed by the Trump administration. This financial aid is intended to respond to the coronavirus pandemic and provide direct payments for businesses and jobless citizens. The US Federal Reserve is providing way more help for the markets now than it did during the previous financial crisis. However, the economic downturn may be much more severe this time. Experts expect GDP to fall from 10 to 20% by the end of the second quarter as well as high unemployment rate that took place during the Great Depression.
The $2 trillion stimulus bill includes $350 billion loan program for small businesses, a $500 billion fund to assist distressed people, and the rest of the funds, $454 billion, will be given to corporations. In addition, the Fed has also taken a number of steps to support the economy such as reducing the refinancing rate to zero, unlimited bond-buying plan, purchases of mortgage-backed and commercial securities in order to support financial markets and stimulate lending.
RISS expert recalled that an increase in government spending results in a larger increase in public debt. "Due to anti-crisis programs, the country's national debt may grow to $ 27 trillion and reach 120% of GDP," Zakharov concluded.