Economy

2020 Riots Halt Economic Turnaround As America Recovers From COVID-19

Major banks are expecting GDP to drop more than 30 percent during the second quarter.

Violent protests across the United States following George Floyd’s death are likely to slow down the country’s economic comeback.

Comeback to Slow Down

Riots have taken the country by storm after George Floyd’s death, leaving businesses and houses burnt, stores looted and sprayed with graffiti from New York to Los Angeles, as business owners are still struggling due to the restrictions placed in order to limit the spread of COVID-19.

“This is a net negative, both in the short term and in the long term,” Sri Kumar, president of Sri-Kumar Global Strategies, told FOX Business, adding that the riots will likely add a “couple of percentage points” to the drop in GDP.

All major Wall Street banks are expecting the country’s GDP to drop more than 30 percent during the second quarter, as stay-at-home orders were issued by governors across the nation, effectively shrinking the US economy by 5 percentage points during the first three months of the year.

With the ongoing riots, a fear of looting is developing in business owners, who will have to essentially rebuild due to the destruction, as re-openings had been going “reasonably well,” but have caused many to delay and big companies to close hundreds of sites across the US.

It’s so far unknown whether or not the riots and gatherings could cause a second wave of Coronavirus infections, although many believe it to be unlikely. Neil Dutta, New York-based Renaissance Macro Research’s head of economics, however, believes that the rebuilding could actually boost GDP.

“This is sort of your classic hurricane-style shock where you have a delay in activity and then things pick up and then there’s a rebuilding process that actually boosts GDP,” Dutta told FOX Business.

Dutta added that such efforts could benefit from “even more stimulus” from the Treasury and the Federal Reserve, who have so far spent more than $2 trillion to support the economy through the Coronavirus crisis, alongside cutting interest rates and introducing lending programs.

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