The Economy Shrinks with Shocking Speed

Three weeks ago, the car service company EmpireCLS was headingtoward its second straight year of a growing business. Empire, based in NewJersey, could not find enough drivers and office workers to meet its needs.

Now, the company is on the edge of failure.

With extreme speed, business in the United States and around theworld has collapsed in the face of the coronavirus. People are told to stayhome. A car service like Empire is not needed.

The company has had a "90 percent revenue loss in threeweeks," said company chief David Seelinger. "We've been through 9/11.We've seen recessions. We've never seen anything like this.''

Seelinger spent last Sunday telling 750 of his 900 employees they nolonger had a job.

"It was the most difficult day of my career," he said.

Never before has the American economy come to such a sudden, violentstop. The fall has shocked Americans who had enjoyed more than 10 years of agrowing job market and economy. Now, the economy is headed toward a deeprecession. Millions of people will likely lose jobs within a few months.

"The economy has never gone from healthy to disaster soquickly," said Jason Furman. He was former President Barack Obama's topeconomic adviser and is now a professor at Harvard's Kennedy School.

"What would take years in a financial crisis has happened indays in this health crisis,'' Furman said.

Since the Great Recession ended in 2009, the economy has risen for11 years. Yearly growth has been at about 2.3 percent since 2010. Employershave added positions for workers for the last nine years.

Just two weeks ago, the government released a great employmentreport: A gain of 273,000 jobs in February. The country was experiencing a50-year low in the rate of unemployment: 3.5 percent.

People were buying goods, eating out and spending money in otherways, too. Things were great.

But all that went away after just a few weeks of the spread of thenew coronavirus in America.

The investment bank and financial services company Goldman Sachssays it expects the economy to shrink at a 24 percent yearly rate between Aprilto June. Days earlier, the company had predicted a drop of just five percentduring the same period.

The information services company IHS Markit predicts 7 million joblosses from April to June. It expects unemployment will rise to 8.8 percent inthe final three months of 2020. Some economists say it will go even higher.

As investors began to understand the seriousness of the crisis, theybegan to sell. Since February 12, the Dow Jones Industrial Average has fallen35 percent. The market events have sharply reduced family wealth and consumerconfidence.

"I'm not sure that anyone honestly has any sense of how this...resolves," said Daniel Feldman. The former U.S. ambassador advises largeinternational companies for a Washington, D.C.-based law firm.

Government officials are trying to help. The central bank has cutits main interest rate to almost zero. It is also trying to make certain thatcompanies can use short-term credit so they can continue to pay employees.Congress and the White House are preparing a large stimulus program that includesgiving money to citizens.

Economists do not usually recognize a recession until long after ithas begun. Now, they can see it coming.

"Never...have I known the week a recession started," saidDiane Swonk, chief economist at the company Grant Thornton. She says thedownturn began in the first week of March as the economy all but stopped.

For now, some Americans are working from home and keeping theirjobs. Some of them may be saving money, which will help the economy later,explained Scott Hoyt, an economist at Moody's Analytics.

Yet the future does not look promising. About 60 percent of Americanworkers--82 million people--are paid by the hour. Most will not be paid if theycannot go to work.