This week, the Federal Reserve Bank of Chicago will be releasing its national activity index, an overview of economic growth. The United States now dealing with one of the most abrupt halts in economic activity in history, after Wall Street plummeted earlier this week. On Monday, markets opened with the S&P 500 down 8.14% (220 points), the Dow Jones opened down 2,250 points (9.71%), and the Nasdaq was down 6.12% (482 points). The lack of consumer spending is making the hit hard to fight.
Wall Street closed trading almost immediately after markets opened. The S&P 500 would have to drop 13% to halt markets again and a drop of 20% would stop trading for the day.
As of 11:30 a.m. CDT, the Dow rebounded to be down 8%, the S&P 500 was down 7.54%, and the Nasdaq was down 7.5%.
“The problem is everyone in America is cutting back their consumption,” Jason Furman, who led the Council of Economic Advisers during the Obama administration, told Washington Post. “A lot of sectors are being hit, especially the services sector. A lot of income and spending is being reduced. That’s just an enormous shock to the economy.”
Unlike the Great Recession, this downturn is the result of a completely external factor, meaning that it is possible this downturn will be much shorter and shallower, according to Louise Sheiner, Economic Studies Policy Director, The Hutchins Center on Fiscal and Monetary Policy.
“It is worth remembering that in the early days of the housing market downturn, many of us thought that the problems would be limited to the subprime mortgage market and wouldn’t be macroeconomically important. We were very wrong,” she notes.
Additionally, the Fed announced that over the coming months that it will increase its holdings of Treasury securities by at least $500 billion and its holdings and agency mortgage-backed securities by at least $200 billion.
Here’s what else is happening in The Week Ahead:
- Census New Home Sales (March 24)
- Builder COVID-19 Webinar (March 25)
- Primary Mortgage Market Surve (March 26)
- Consumer Sentiment (March 27)