Economic Scenario 1: Quick Recovery
This scenario most people tend to forget. You only hear the media talking about the crash and companies that might experience difficulties because of the Corona Virus shock. However, a quick recovery, with a timeline of a couple of months, is definitely on the table. Most of the losses in the S&P 500 could be recouped, even though we probably won’t be at new all time highs soon. In this scenario the government provides aid to especially affected companies. Also, this scenario can be fueled by a decline in the number of infected people due to quarantine in many parts of the world. China is already reopening Hubei province and picks up production in their factories.
Moreover the quick passing of a $2 Trillion stimulus bill by the US government could stabilize markets and initiate a recovery. The bill consists of a loan program for small businesses, an aid fund for cities and states and the use of helicopter money. Many Americans will receive checks directly from the government, thereby creating demand and stimulating the economy. However, only time will tell if this stimulus really has the effect politicians hope it will.
Finally we can conclude that an economic recovery over the course of the next months is a possibility. Also we should not get too pessimistic about the future. Even though the virus outbreak is a huge catastrophe this, too, shall pass.