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The Coronavirus and the Economy

Econ Focus
First Quarter 2020

The spread of SARS-CoV-2, the virus behind the illness COVID-19, brought tragedy to households across the United States in the late winter and spring of 2020. Tens of thousands of people in America have died and many more have suffered serious illness.

For individuals who were spared these direct effects, the virus led to havoc in daily life and in the economy. Millions have filed for unemployment benefits, as shown in the interactive chart below. This gallery offers a record of some of the unprecedented economic changes that Americans experienced.

Click the links following the chart to see more.

  • Going Away and Going Out

    The effect of the crisis on travel and dining was massive

    Restaurant diners
    Airline Passengers

  • A Shift in Payments

    Demand for cash increased while use of credit cards went down modestly

    cash demand

    credit and debit card use
  • Confidence in the Economy

    The crisis shook measures of business, consumer, and investor sentiment

    household income

    consumer confidence

    ISM index

    stock market

    fifth district outlook
  • How the Fed Responded
    Federal Reserve Assets

    • March 3. Federal Open Market Committee (FOMC) lowers the target range for the federal funds rate by 1/2 percentage point, to 1 percent to 1.25 percent, noting that "the coronavirus poses evolving risks to economic activity."
    • March 15. FOMC announces it is lowering the target range for the federal funds rate by 1 percentage point, to 0 percent to 0.25 percent. To encourage borrowing from the discount window, Fed lowers the primary credit interest rate by 1.5 percentage points, to 0.25 percent.
    • March 17. To support the market for commercial paper (short-term corporate debt) and to support primary dealers that buy and sell Treasury securities, Fed revives the Commercial Paper Funding Facility and the Primary Dealer Credit Facility, which were originally created in 2008 during the financial crisis. These programs are based on the Fed’s emergency powers under section 13(3) of the Federal Reserve Act.
    • March 18. Fed uses its emergency powers to create the Money Market Mutual Fund Liquidity Facility to support the markets for commercial paper and other assets that money market funds hold in order to maintain confidence in money market funds.
    • March 19. Fed expands its existing arrangements, known as central bank swap lines, that provide lending to foreign central banks to assist them in delivering U.S. dollar funding to financial institutions in their markets. In addition to the five current participants — the Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank, and the Swiss National Bank — nine more foreign central banks are added.
    • March 23. Fed uses its emergency powers to create the Primary Market Corporate Credit Facility to buy debt securities from corporations and the Secondary Market Corporate Credit Facility to buy those securities on the open market. To further support the availability of credit, Fed also revives the Term Asset-Backed Securities Loan Facility, or TALF, a broader version of the emergency program originally created during the 2007-2008 financial crisis.
    • March 31. Fed announces the Foreign and International Monetary Authorities Repo Facility to enable foreign central banks not participating in the central bank swap lines, as well as international monetary authorities such as the International Monetary Fund, to borrow dollars using Treasury securities as collateral.
    • April 6. Fed announces a new emergency lending facility, the Paycheck Protection Program Liquidity Facility, to support the Small Business Administration's (SBA) Paycheck Protection Program. The SBA program guarantees loans to small businesses so that those businesses can keep workers employed.
    • April 7. Fed and other bank regulatory agencies issue a revised interagency statement encouraging financial institutions to work with borrowers and offer “prudent loan modification programs” to customers affected by COVID-19.
    • April 9. Fed uses its emergency powers to create the Main Street Lending Program for the purchase of up to $600 billion in loans, funded in part by $75 billion from the Treasury Department, and the Municipal Liquidity Facility to lend up to $500 billion to states and municipalities.
    • April 14. Fed and other bank regulatory agencies announce temporary changes to appraisal requirements for residential and commercial real estate lending.
    • April 16. Fed announces that its Paycheck Protection Program Liquidity Facility is fully operational.

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