The economic outlook in United States (US) has shifted dramatically with the rapid spread of COVID-19, said the International Monetary Fund (IMF) in the latest report released on Monday - Photo by the White House

JAKARTA (TheInsiderStories) – The Federal Reserve (Fed) rated United States (US) economy would shrink to 6.5 percent this year. However, the central bank expects the economy will return to growth in 2021, with unemployment falling to 9.3 percent and GDP increasing 5 percent, followed by 3.5 percent growth in 2022 amid the COVID-19 pandemic.

Based on the latest estimation, chairman of the Fed, Jerome Powell, assured that the Bank is committed to using its full range of tools to support the US economy in this challenging time, thereby promoting its maximum employment and price stability goals.

The virus outbreak, he noted, is causing tremendous human and economic hardship across the US and around the world. The virus and the measures taken to protect public health have induced sharp declines in economic activity and a surge in job losses, said the governor.

In addition, said Powell, weaker demand and significantly lower oil prices are holding down consumer price inflation. But, financial conditions have improved, in part reflecting policy measures to support the economy and the flow of credit to US households and businesses.

Then, the ongoing public health crisis will weigh heavily on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term. He added, the policymakers will continue to monitor the implications of incoming information for the economic outlook, including information related to public health, as well as global developments and muted inflation pressures, and will use its tools and act as appropriate to support the economy.

“In determining the timing and size of future adjustments to the stance of monetary policy, the committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective,” said Powell.

The secretary of commerce reported, in the first quarter of 2020, US economy shrank 4.8 percent in the first quarter of 2020, the first contraction since 2014. The contraction was experienced because efforts by the government to stem the spread of the COVID-19 have forced many companies in the country to close and consumers not to leave their homes.

“Today’ GDP numbers are weak, but in line with expectations as a result of the COVID-19-driven disruptions to daily lives at home and around the globe that have rocked global markets and supply chains,” said the secretary of commerce, Wilbur Ross in official statement released on on April 29.

He continued, “We continue to have the most resilient economy in the world, driven by innovative and hardworking Americans who have shown that they are willing to make the needed sacrifices to defeat this invisible enemy.”

Ross conveyed, President Donald Trump has taken bold action to leverage the expertise and resources of the entire nation in this fight. Congress also has confronted the seriousness of this challenge with trillions of dollars in relief funding for those impacted by the virus, establishing a firm footing for a swift and strong American comeback.

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