Global Policy Report: Covid-19 Update

As of April 2, 2020: COVID-19 is wreaking havoc on nearly every aspect of the global economy. It is clear now that what was originally a supply-side shock—and to a lesser extent an export demand shock for the global economy—has morphed into something far more pernicious. The unique nature of the pandemic, and the government actions to stem the trajectory of the outbreak, is severely impacting global manufacturing, production, and supply chains worldwide. As households hunker down, the demand side of the world economy is also experiencing broad-based headwinds. With each new data point, it becomes painfully clear, the global economy has entered a full-blown recession. As unprecedented as the crisis is, it’s being met by a wholly unprecedented global policy response. In the U.S., the Federal Reserve responded within the first weeks of March by cutting the target range to effectively 0% and quickly escalated its financial market support throughout the month. The Fed’s balance sheet has already expanded by over $1 trillion in March alone. On the fiscal policy side, the U.S. Congress and President Trump have already responded with three pieces of legislation totaling more than $2.3T, or 11% of 2019 nominal U.S. GDP. For perspective, after the start of the Great Recession in December 2007, it took the U.S. Congress 10 months to pass the Troubled Asset Relief Program (TARP) and it took the Federal Reserve 11 months to implement quantitative easing (QE). The full fiscal stimulus pumped into the economy throughout 2008, 2009 and 2010 combined totaled about 10% of 2007 GDP. Click to read more at