Business
Real economy faces its moment of truth as Wall Street parties on – Sydney Morning Herald
Three big US banks and a Federal Reserve Board governor have painted a gloomy and uncertain outlook for the US economy even as Wall Street continues to price in a “V-shaped” recovery.
JP Morgans chief executive Jamie Dimon perhaps provided the best explanation for why the markets, and the White House, appear to be so complacent about the impact of the coronavirus, even as it is spreading in the US at the fastest rate since its onset.
“This is not a normal recession,” he said.
“The recessionary part of this you are going to see down the road. You will see the effect of this recession. Youre just not going to see it right away because of all the stimulus.”
His chief financial officer, Jennifer Piepszak, expressed it in starker terms: “May and June will prove to be the easy months in terms of this recovery. Now were really hitting the moment of truth in the months ahead.
The US has a program similar to our “JobKeeper” program, the “Paycheck Protection Program”, under which small and medium-sized businesses can get interest-free and, if they meet all the conditions, non-repayable loans that effectively enable them to add $US600 a week to the usual unemployment benefits for workers they have furloughed, or laid off but plan to rehire. More than 30 million people have been beneficiaries of the program.
That support, however, expires on July 31, with no plans yet to extend it, although it is possible as might be the case here that there could be a narrower version with reduced benefits if Congress and the Trump administration act quickly.
This is not a normal recession. The recessionary part of this you are going to see down the road. You will see the effect of this recession. Youre just not going to see it right away because of all the stimulus.
JP Morgan chief Jamie Dimon
The point Dimon was making was that the response to the pandemic from Congress, a $US3 trillion stimulus package, and a similar injection of liquidity and credit from the US Federal Reserve Board, has so far disguised and deferred the damage the virus is doing to the economy.
Citigroups Michael Corbet said a similar thing: “We dont want people leaving the
-
General23 hours agoFallout from Ned Kelly’s last stand haunted families for generations
-
General22 hours agoTasmanian boy left homeless due to child protection department’s ‘gross negligence’, family member says
-
Business23 hours agoHow to make $5,000 a month in passive income
-
General12 hours agoHuman remains located, police make arrest in search for Sunbury man Joshua Bishop