The Federal Reserve will keep rates close to zero until the virus ends.
The Commerce Department will release the latest report on the economy on Thursday and it is expected to be a rather ugly picture.
The first reading on the second quarter gross domestic product is estimated to show a fall at an annual rate of 34.1 percent. That would be the biggest drop ever recorded. The first quarter showed a decrease of 5 percent.
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The US economy faces a bleak picture as a resurgent coronavirus intensifies doubts about a sustained recovery the rest of the year.
A big drop in consumer spending as people stayed home and avoided shopping, traveling, or gathering in crowds as the virus raged is expected to show a slump in the April-June quarter.
Depressed activity in areas such as business investment, home construction, and government spending also contributed to the worst quarterly contraction dating to 1947.
Most analysts expect the economy to make a strong rebound in the current July-September quarter, perhaps as much as 17 percent or more on an annual basis.
FED UNDERSCORES SUPPORT FOR THE ECONOMIC RECOVERY THREATENED BY CORONAVIRUS RESURGENCE
With the rate of confirmed coronavirus cases now on the rise in most states, more companies are forced to back down on reopens and the Republican Senate proposes to cut government aid to the unemployed, the economy could worsen in the coming months. .
Analysts warn that prospects could darken further if Congress does not enact enough financial aid to replace the $ 600-a-week federal boost to expiring unemployment benefits or provide enough aid to businesses and state and local governments.
Senate Republicans on Monday launched a $ 1 trillion proposal that falls short of a $ 3 trillion bill that the House passed, leaving a huge gap for Democrats and Republicans to fill as some elements of past programs are depleted congressional emergency aid.
On the unemployment issue, the Labor Department is expected to say that the number of claims for unemployment benefits increased for the second consecutive week to 1.45 million, compared to 1,416 million the previous week. Since the coronavirus blockades began in mid-March, some 52.69 million people have filed for unemployment. An additional 1.45 million would bring that total up to 54.14 million, or 33.8 percent of the United States workforce.
FED PERSPECTIVES TURN GLOOMIER AS CORONAVIRUS EXPANDS
Recent reports sketch a cautious picture of the economy, with weekly claims for unemployment benefits still exceeding a million and consumer confidence plummeting, with big declines in Michigan, Florida, Texas and California, all of which suffered a resurgence in cases. of confirmed viruses.
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Increasing government aid is seen by economists as essentially a stopgap move to keep the recession from deepening further. According to them, the most critical need is to control the virus, probably through a vaccine that will probably not be widely available until next year.
Associated Press contributed to this article.
