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Monday, July 13, 2020
An Evaluation and Prediction on COVID-19 Pandemic Development in the U.S.
ANBOUND

The COVID-19 outbreak in the United States continues to worsen recently. From July 1 to 3, the number of new infections in the United States exceeded 50,000 per day, setting a record high. As of July 3, more than 132,000 people in the United States died of coronavirus, accounting for 24.8% of all COVID-19 deaths worldwide. This means that one out of every four COVID-19 deaths worldwide is American. In view of this, it is now necessary to make a mid-term basic judgment and prediction on the development of the pandemic in the United States.

Researchers at ANBOUND believe that although the U.S. economy and capital markets are now facing a multitude of problems, the main impact at the current stage is due to the pandemic. The impact of the pandemic on the U.S. economy is huge, and the capital market is affected by the development of the pandemic. In addition, another major issue of concern is the reaction of the U.S. Congress on the pandemic. If the pandemic continues, the U.S. Congress is bound to increase the appropriation to save the economy, and such appropriation under the modern monetary system is likely to influence and interfere with the interest rate policy of the Federal Reserve.

American society's attitude towards the pandemic is sometimes inconceivable to Asians. CNN reported on July 2 that a cluster of infections had occurred in a bar near the Michigan State University campus. At least 152 confirmed cases are linked to the bar, according to Ingham Health Department spokeswoman Amanda Darche. The cases that were traced to the bar includes 128 primary cases and 24 secondary cases; secondary cases here refer to those infected by people who have been to the bar. American media reported that the bar that caused the mass infection was "Harper's Restaurant & Brew Pub", officially opened on June 12. Although signs to wear masks were posted in the bar, few of its patrons actually doing that. Photos posted on social media by some netizens showing that there was a long queue in front of the bar and no one was wearing a mask. After the incident, the local health authority has requested self-isolation of those who visited the bar between June 12 and June 20.

On July 1, Michigan Governor Gretchen Whitmer announced a ban on indoor bar service in most of the state. Several states, including Texas and California, have also ordered the bars to close. America's top infectious disease expert, Anthony Fauci, has warned that people in bars are at great risk of infection during a "virus pandemic". "Congregation at a bar, inside, is bad news. We really got to stop that right now," he added.

Based on various pandemic information, researchers at ANBOUND concluded that although countries have different control policies in the face of the pandemic, the impact of the virus pandemic always exists, and this is especially true for the United States. The United States is a federal country, the power of social control lies in the state government, and each state government is different in government leadership, hence the extent of pandemic control is also different. From an objective point of view, the contribution of the scientific community in the United States to public policy is rather limited. The major contribution of the scientific community is in the research and development of pharmaceutical products. Therefore, based on our comprehensive prediction, it is estimated that the effective control of the pandemic in the United States will come when the vaccine development is completed and the vaccine is promoted and wildly applied. Judging by the timing, the fastest time for the vaccine to be available is around the summer of 2021. As for the United States' reliance on effective public policy, governance power, and social control to limit the spread of the pandemic, that is highly unlikely. Therefore, the core issue of pandemic control in the United States has to be the development and application of vaccines.

On this basis, the outlook for the world economy around the summer of 2021 is highly uncertain. Overall, European economies are more confident and likely to remain stable. In addition to China, the situation in Asia will be more stable. China's economy has been affected by both the pandemic and control policies. Excessively strict and unnecessary control measures may have negative effects and consequences. Therefore, it is expected that the Chinese economy will maintain a steady downward trend. The U.S. economy, due to the recurrence and continuation of the pandemic, is likely to stimulate the U.S. Congress to further implement the economic stimulus package. Chan Kung, the chief researcher at ANBOUND, predicts that the Federal Reserve will have no alternative but to accept negative interest rates if the future stimulus package from the U.S. Congress exceeds USD 5 trillion.

A negative interest rate in the U.S. would have a huge impact on the U.S. financial market and may even lead to a structural adjustment. In particular, the financial industry of the United States is based on the insurance industry, which is very sensitive to negative interest rates. Moreover, a Joe Biden victory in this year's election would make it more likely for him to launch a new economic stimulus package in order to win the Democratic Party's new political landscape. Whether this new stimulus package will be passed in the Congress, and whether it will exceed the USD 5 trillion, all these depend on the more conventional political attitude of the Republican Party.

Final analysis conclusion:

The COVID-19 pandemic has become a major factor affecting the U.S. economy and capital markets. If the pandemic in the U.S. continues to flare up and worsen, the U.S. Congress might roll out economic stimulus totaling more than USD 5 trillion, and the Federal Reserve could very well implement negative interest rates.

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