The double-barreled approach of a $1 trillion proposed fiscal stimulus program and Federal Reserve policy could help soften the blow of a recession.
The White House is seeking a stimulus package worth between $850 billion and $1 trillion that could result in emergency funds for individuals and assistance for small businesses and credit for industries hard hit by the reaction to the virus.
"Under any scenario, if we get a good stimulus package, I still think it's a big hit. It's hard to gauge but my guess is we'll be down 2% to 3% in Q1 and around the same in Q2, assuming we get a lot of fiscal stimulus," said Mark Zandi, chief economist at Moody's Analytics. "It's one of those things we won't know for a year down the road.
It also announced a new facility early Tuesday to help the commercial paper market, which had stalled out. After the market close Tuesday, it announced a program for primary dealers. "To me, the question is when it comes to recession, is it about the second quarter? The question is what happens to the third quarter? Are we able to stop this soon enough to only get one bad quarter," he said.
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