The rhetoric of many leading republicans in the U.S., including President Trump, is that the sooner businesses open, the better off the economy will be. However, it seems this may not be the case.
European countries, who overall has responded to COVID 19 with lockdowns and strict policies mandating mask-wearing and social distancing, appear to be doing better than the U.S. with handling COVID cases and buffing the damage to their economies. While the United States’ population is just under half of all of Europe’s, the U.S. has seen nearly 1.5 times as many COVID cases.
With such a high number of cases, one would expect that the benefit to the economy would be just as great the American economy, but the opposite is true.
Chief European economist at Goldman Sachs Jari Stehn stated, “It’s very clear that the euro area turned down more sharply but we also expect it to bounce back more sharply.”
Despite being harder hit than the U.S., Europe is expected to rebound much more quickly.
JPMorgan Chase & Co. expects the euro area economy to contract by 6.5%, slightly worse than the U.S., which is expected to contract by 5.1%. However, the euro area economy is forecast to rebound 6.2% as opposed to the U.S.’s expected 2.8%
The reason for this? According to Bruce Kasman, the chief economist at JPMorgan, Europe’s recovery is possible because they have “broken the link” between mobility and the spread of COVID. Because of their handling of the crisis through better social distancing, mask-wearing, and contact tracing, Europe has so far been able to recover much more quickly than the U.S.
There is still hope. Chief U.S. economist at Barclays Plc. says that despite the current situation, the U.S. can still catch up.
First reported by Bloomberg