The United States has become the largest focus in the world in the expansion of COVID-19 and New York is its great epicenter, where such a dire situation is not remembered since the attacks of September 11, 2001 as experts foresee an impact. “catastrophic” economic billions of dollars.
Despite leading the most severe restrictions in the entire United States, where there are more than 100,000 infections tested, only New York State already has almost half of them (45,000) and in the Big Apple, with a high population density. , has more than 25,500 positives and 366 deaths, a quarter of all those in the country (1,544).
“The economic impact is going to be catastrophic. After 9/11, parts of lower Manhattan were closed for months, but that was only a small portion of the city. The rest of the city continued to function, despite the fact that, obviously, people I was very sad about the attacks, “says economist Nicole Gelinas, from the Manhattan Institute.
The New York authorities have been forceful with the closure of all businesses and non-essential activities, which has drastically reduced the massive presence of people who use to circulate through the streets and transportation of the city and the northern suburbs. So much so that the Metropolitan Transportation Authority is bankrupt and has asked for federal aid of 4,000 million dollars.
THE ECONOMIC CONSEQUENCES
The director of the state budgets of New York, Robert Mujica, has already announced that the coronavirus crisis will suppose to the state Government a reduction of his fiscal income of 15,000 million dollars, which will affect the total amount of the budgets that before the crisis they were set at 178,000 million.
But for the economist Nicole Gelinas, we must add to this other losses that the Big Apple will suffer, “whose economy produces around 1.5 trillion dollars in personal income each year, and if it is going to lose around 10% of that amount, this could mean $ 150 billion more in losses.
“About 800,000 people work (in New York) in hotels, restaurants, and retail stores. So being conservative, we may have lost more than half of those jobs, potentially half a million jobs. lost, which means more than double the number lost after 9/11, “says Gelinas.
Another difference that Gelinas points out, between the current crisis and that of 9/11, is that then “people wanted to go out to eat, to Broadway and to support the city and a large number of tourists from all over the country and from the entire world came to New York to enjoy the city. But now, the vast majority of sectors of the economy are simply closed. ”
These losses occur in a context in which, according to various surveys, around 40% of the population assures that they cannot face an extraordinary expense of $ 400 without getting into debt.
“Unemployment insurance in New York is $ 500 a week, which means that this is not going to replace most of the income that comes to be about $ 25,000 a year,” adds Gelinas, who considers the check The $ 1,200 that the federal government has promised for people with incomes of less than $ 75,000 a year will also not be enough.
In addition, he points out that although large companies such as Walmart and Amazon are hiring more people due to the increase in orders through the internet as a result of the confinement, the small and medium-sized companies in the city are the ones that are going to suffer the most
“These are the ones who are really stuck struggling. They are going to need help with their rent payments because many do not have the place where they operate,” adds the analyst, who insists that these injections have to be done either through condemnation of taxes or through “subsidies”, because “they will not be able, at any time, to repay loans”.
VOLATILITY IN WALL STREET
The markets have not been oblivious to the evolution of the pandemic and even the floor of the New York Stock Exchange closed last Monday, allowing only electronic operations, which are usually already majority.
But in this week without brokers, Wall Street ended up posting weekly gains after the sharp falls of the previous week. The Dow Jones added almost 13% weekly, the S&P 500 more than 10% and the Nasdaq 9%, but the three indicators are still in bearish territory and have lost more than 20% of their value since recent records.
Volatility has characterized the markets in this way since the beginning of this crisis, especially since COVID-19 has converted the United States. at the epicenter of the pandemic in the world.
The economic effects are already plaguing the country, which last week registered a historic increase in applications for unemployment benefits, up to 3.28 million, reflecting the layoffs caused by the closings of shopping centers, restaurants, leisure parks, theaters and a huge drop in travel, especially by plane.
THE FED AND THE GREATEST STIMULUS PLAN
In this context, the Federal Reserve decided earlier this week to purchase an unlimited amount of Treasury bonds and mortgage-backed securities in a flurry of programs to sustain financial markets in the face of the COVID-19 crisis.
To all this we must not forget yesterday, President Donald Trump gave the green light to the largest economic stimulus package in the history of the country, worth more than 2 billion dollars, with the aim of containing the economic impact of the coronavirus pandemic.
The stimulus plan, which represents around 10% of the country’s gross domestic product, is three times the amount implemented in 2009 after the outbreak of the financial crisis, which totaled $ 700 billion.
The legislation includes an item of about $ 250 billion that will be reserved to make direct payments to individuals and families of $ 1,200 for those with an income of less than $ 75,000 a year plus $ 500 for each child under 17 years of age.
In addition, $ 350 billion in small business loans and another $ 250 billion are available to expand unemployment insurance benefits.
It also awards $ 150 billion to support local and state authorities, and another $ 130 billion to strengthen the health system, which in some places, such as New York State, is beginning to be saturated.