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The Underlying Economy Of US Is Sound Unlike 2007-2009 Recession: NRF

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The National Retail Federation Chief Economist Jack Kleinhenz stated that while the coronavirus pandemic "has triggered shocks", the underlying U.S. economy is sound unlike during the Great Recession of 2007-2009.

However, Kleinhenz noted that bringing the virus under control was crucial or else the fallout would be worse.

In the April issue of the NRF's Monthly Economic Review, Kleinhenz noted that how soon the U.S. gets a handle on containing the virus will determine the degree of the impact on the economy and how quickly businesses will be able to reopen.

The report highlighted that U.S. gross domestic product that was growing at a 2.1 percent annual rate at the end of 2019 is "about to go into a mandated nosedive."

Reflecting the shutdown of large swaths of the U.S. economy due to the coronavirus pandemic, unemployment claims soared to 3.3 million during the week ending March 21, almost five times the previous record of 695,000 set in October 1982.

Kleinhenz also noted that retail foot traffic is "nearly nonexistent" as millions were out of work across economic sectors and stores as well as restaurants were closed to promote social distancing.

A growing number of retailers in the U.S. are furloughing their employees as the coronavirus pandemic resulted in the temporary closure of retail stores nationwide. According to data compiled by Bloomberg, the number of furloughed employees at major U.S. chains now totals around 600,000, with more furloughs expected.

Nonetheless, the U.S. economy benefited from "sound fundamentals" going into the COVID-19 crisis, and was not "broken" in the way it was during the Great Recession of 2007-2009, Kleinhenz maintained.

Recent actions by the Federal Reserve and Congress will help by providing liquidity and keeping credit available for retailers and other businesses, Kleinhenz said.

According to the NRF chief economist, U.S. retail sales data for March may not be reliable, as several retailers whose businesses had closed were not in the office to reply to the Commerce Department's monthly survey of sales results.

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