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Economies at a glance report - May 2020

02 June 2020 Momentum Investments
Sanisha Packirisamy, Economist at Momentum Investments

Sanisha Packirisamy, Economist at Momentum Investments

Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments

Herman van Papendorp, Head of Investment Research & Asset Allocation at Momentum Investments

United States

The reopening of the economy is unlikely to be swift,as lingering fears over the virus will suppress demand for many services. Aquick response from policymakers supported households and firms early on in the crisis, but more is likely needed to limit economic scarring. The Federal Reserve (Fed) warned that long-term unemployment and the risk of additional virus outbreaks could lead to a protracted recovery in economic activity. While the Fed has already cut short-term interest rates to zero, it could still pledge to pin down longer-term borrowing costs or ramp up its purchases of treasury securities.Meanwhile,on the fiscal side, the HeroesAct is unlikely to be passed by the Senate in full, but a compromise could be reached on a smaller package,particularly given it isan election year.

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