The Top Line

• Though many anticipate a short recession in the wake of COVID-19, a strong, quick recovery is also expected. Our economy is not the same as a decade ago. 

• The Federal Reserve puts on the pads and dusts off the playbook to help ensure that businesses have access to credit to continue operations during the COVID-19 outbreak. 

• The Administration and Congress hear America's small businesses loud and clear and are preparing policies to help them and their employees through their time of need. 

• Autonomous delivery technologies could be helping mitigate the spread of COVID-19. 

U.S. GDP Outlook: COVID-19 vs. The Great Recession

• Though the decline in U.S. GDP due to the COVID-19 outbreak is projected to be sharp, GDP is projected to quickly begin rebounding back to its previous level in the second half of 2020 (above). 
• This pales in comparison to the Great Recession, when it took over three years until 2011 for GDP to reach its previous high in 2007 (below). 

The Fed's Game Plan

In the midst of the largest fluctuation in business and financial markets since the 2008 Financial Crisis, the Federal Reserve has dusted off its crisis-era policies and repurposed them to face the current challenge from COVID-19. 

• The Federal Reserve has cut its rates to 0% to make sure that banks continue to have ample access to credit they need to lend to consumers and businesses to keep our economy moving. 
• In its first move of many, the Federal Reserve announced it will be purchasing $700 billion in bonds to prevent deflation and to complement the stimulus from rate cuts. 
• Taking a page from its old playbook, the Federal Reserve has restarted programs to ensure adequate funding is flowing to the credit markets for businesses that employ millions of Americans. 

Bridges for small business through the COVID-19 outbreak

As the backbone of the American economy, small businesses are essential to sustaining our economy through the COVID-19 outbreak and the subsequent recovery. 

• Senate Republicans have proposed $300 billion in guaranteed credit lines for small businesses experiencing interruptions due to COVID-19. The proposed business interruption loans are for employers with 500 workers or less and would be arranged through the businesses' normal bank. The bank would make the loan with a government guarantee of any potential default losses. 
• The move complements the actions the Small Business Administration (SBA) has already provided through the Economic Injury Disaster Loan Assistance program. With every state and most U.S. territories grappling with COVID-19, the SBA is ready to help. 
• Banks are offering assistance to their customers and communities too: offering deferrals on home mortgages and auto loans, working with local businesses on their lines of credit, and waiving many ordinary fees for their customers experiencing hardship. 

Disruption of the Week 

Autonomous vehicles and drones were already disrupting retail commerce and home delivery, now they are providing critical services in areas impacted by COVID-19. 

• Over the past few years, a wide range of autonomous delivery technologies, including drones that deliver packages by air, "last-mile" robots that deliver goods to your front door, and autonomous cars have been deployed or tested on a small scale. 
• Examples include Amazon debuting "Prime Air" autonomous electric drones, GM building autonomous "people movers", and UPS successfully delivering a pharmacy prescription to a customer's home. 
• Earlier this year, the Department of Transportation provided regulatory guidance on automated driving systems and granted the first testing exemption for a driverless vehicle. 
• However, with the spread of COVID-19 and need for social distancing, autonomous delivery technology has proven instrumental in facilitating the delivery of medical supplies and food. 
• Local authorities in China have even gone so far as to offer incentives to fund the purchase and operation of driverless delivery vans in cities and towns. 
• While it remains to be seen how the current crisis affects the long-term future adoption of autonomous delivery technologies, proven successes could pave the way for this disruptive technology to become mainstream. 

Myth vs. Fact

• MYTH: In the midst of the COVID-19 crisis, banks and corporations have been getting free cash with no strings attached from institutions like the Federal Reserve. 

• FACT: The Federal Reserve does not give banks or firms free money, it makes loans. The Federal Reserve does not keep a dime of the profit from those loans, it returns them to its boss: you, the taxpayer. In 2019 alone, the Federal Reserve returned $54.9 billion in net profits to the Treasury Department's general fund. 

Further Reading

• What is the foundational role capitalism has and will play in surmounting the COVID-19 crisis and recovering after it passes? The role drug-makers have played in nimbly pivoting to produce cures and a comparison of the U.S. health care system's success to the faliures of Italian government-centric, single-payer models that has mired Italy in the worst COVID-19 outbreak the world has seen. WSJ. 

• In trying times, you can always find Americans volunteering in their communities to help those less fortunate. But in a situation like COVID-19, where social distancing and stringent personal sanitation are necessary, can we square the circle? In our country's perennial spirit of innovation and compassion, organizations across the country are figuring out how. Christian Science Monitor.