Capitalisn’t: Raghuram Rajan’s Vision of an Indian Path to Development
Chicago Booth’s Raghuram G. Rajan explains why India’s strengths play to services-based development.
Capitalisn’t: Raghuram Rajan’s Vision of an Indian Path to DevelopmentThe rapid unfolding of the COVID-19 pandemic has created grave concerns for the health and welfare of the US population and the economy. The economic worries are very apparent in financial markets. From the closing bell on February 21 through March 20, US equities fell more than 30 percent, and stock market volatility skyrocketed.
At present, we simply don’t know the extent of the overall disruption to the economy. We are still months away from confidently gauging COVID-19’s impact on output growth. However, the latest wave of results from our Survey of Business Uncertainty (SBU) indicates that firms are bracing for a huge negative impact on their businesses. Our results also say the outlook deteriorated rapidly over the past two weeks.
The SBU was in the field from March 9 until March 20. Relative to February, firms’ four-quarter-ahead sales growth expectations fell sharply, from above 5 percent to below zero. This fall is, by far, the starkest one-month swing we’ve recorded since the inception of the SBU in October 2014. In addition, firms’ uncertainty about their own sales growth rates rose 44 percent from February to March.
Interestingly, SBU respondents did not report a material softening in the outlook for employment growth during the next 12 months, or in the capital investment rate four quarters hence. However, given the latest signals from the labor market—most notably, the March 19 unemployment claims report—employment is set to contract sharply for at least a few weeks. Perhaps respondent firms see the coronavirus impact as sharp but short-lived, with little impact on longer-term employment and plans for capital expenditure.
This article is continued at the Federal Reserve Bank of Atlanta’s macroblog. Click here to read it in full.
Chicago Booth’s Raghuram G. Rajan explains why India’s strengths play to services-based development.
Capitalisn’t: Raghuram Rajan’s Vision of an Indian Path to DevelopmentEconomist Amy Finkelstein offers her solutions for the problems plaguing the US healthcare system.
Capitalisn’t: Rebooting American Health CareWhen prices are rising in the 3–4 percent range, savvy shoppers can exploit the power of competition among retailers.
Bargain-Hunting Households Can Beat InflationYour Privacy
We want to demonstrate our commitment to your privacy. Please review Chicago Booth's privacy notice, which provides information explaining how and why we collect particular information when you visit our website.