Some business models won't survive post-pandemic – U.S. Fed

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United States Federal Reserve officials worry that 'even after social distancing requirements were eased, some business models may no longer be economically viable.' coronavirus

Defeating COVID-19 is the key factor in restoring the

, but some of the damage may persist especially if consumers remain reluctant to return to normal activities, Fed officials said in the minutes of the policy meeting held late last month.may not be able to endure a shock that had long-lasting financial effects." And they worried that"even after social distancing requirements were eased, some business models may no longer be economically viable," especially if consumers decide to"avoid participating in particular forms of economic activity."at least temporarily, the central bankers said the US economy will see an"unprecedented" decline in the 2nd quarter as the unemployment rate rises to the highest in the post-World War II period.

The Fed officials said"in addition to weighing heavily on economic activity in the near term, the economic effects of the pandemic created an extraordinary amount of uncertainty and considerable risks to economic activity in the medium term." They raised concerns that"temporary layoffs could become permanent," and that"the possibility of secondary outbreaks of the virus may cause businesses for some time to be reluctant to engage in new projects, rehire workers, or make new capital expenditures," according to the minutes of the April 28-29 meeting.

 

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