TOPLINE
While the economic impact of the current surge in coronavirus cases in Sun Belt states like Texas, Florida, Arizona and California has been minimal so far, analysts at Goldman Sachs predict that more closings and reopens in those states have the potential to go on. long-term in the national economy.
People cross the street in Huntington Beach, California on July 19, 2020 amid the coronavirus … [+]
KEY FACTS
Earlier this month, growing cases of coronavirus in the southern and western states prompted the investment bank to revise its third-quarter GDP growth forecast from 33% to 25%, over the same quarter last year.
Goldman experts now say the “Sun Belt storm has worsened and spread,” with the rate of new cases in the United States increasing from 50,000 per day to more than 66,000 per day.
There is a risk for future growth if containment measures taken by states like Texas and California, including mask mandates and restrictions on eating indoors, are not enough to slow the spread of the virus.
In addition to delaying growth until next year (instead of next quarter), Goldman analysts say those new restrictions could lead to longer-term economic damage, including a potential 4% impact on consumer spending levels.
It would also be more difficult to re-hire workers who have been temporarily laid off, for example, and more companies are likely to close permanently.
Big number
80% According to Goldman researchers, that’s the part of the United States where the reopening is paused or reversed.
Key background
Over the weekend, President Trump continued to downplay the severity of the crisis. “It is what it is,” he told Fox News. The United States now accounts for nearly 1 in 4 coronavirus deaths worldwide, with more than 140,000 deaths as a result of the virus and Florida, Texas and California among the states that have been hardest hit by the outbreak in recent weeks. Hospitalization rates are increasing, and 12 states are now not meeting CDC’s hospital capacity guidelines, according to Goldman Sachs.
Further reading
Dallas Fed President: economy would ‘grow faster’ with a mask mandate, unemployment would fall (Forbes)
Senate Democrats propose $ 350 billion in coronavirus aid for communities of color. Here is exactly what that would look like. (Forbes)
The U.S. economy is taking another hit as coronavirus cases rise and businesses shut down again. (Forbes)
Republican leaders will meet Trump on the stimulus package. This is what we know about it. (Forbes)
