The economic impact of coronavirus outbreak is still largely unknown. In addition, to evaluate the impact on Dividend growth and GDP growth expectations in the United States is important for those wanting to gain money in the long run. It is even for people who need the money within the next couple of years.
In the outbreak of coronavirus there are growing concerns about the economic consequences and the financial stability of the economy is largely unknown. As a result, policymakers, businesses, and market participants are trying to revise growth expectations in the short run and in the long run.
Moreover, the current situation is unprecedented. The impacts of coronavirus in the United States reflects the expectations of investors about future payoffs. A natural starting point may be equity markets, bond markets and credit markets. Indeed, much of the media commentary that has evolved around the US stock market has received a lot of attention.
The cross-section of stock price reactions to coronavirus crisis Equity markets in the U.S dropped nearly by 30 percent. This is an extraordinary amount, which is a sharp decline. The impact of the coronavirus on the stock market in the U.S implies that if discount rates do not move and the economic impact on dividends lasts no more than ten years. It appears to be a rather extreme scenario. However, this is typically not the right way to interpret movements of the impact on the stock market in the United States. It shows that most of the variation in the value of the stock market is due to changes in expected returns.
Impact of Coronavirus On Economic Growth in the United States
This insight brings both good news and bad news. The good news is that the expectations of the investors did not decline as dramatically. The bad news is that we learn little about growth expectations instead, we learn about the changes in discount rates. This is driven by the impact of coronavirus on the stock market in the United States. This includes shifts in risk aversion, sentiment, or uncertainty about long-run growth. Moreover, there is no sign that is showing a downturn. It is a good trend for economic growth on market rates.
The dynamics of expected dividend and GDP growth expectations in the United States did not respond much to the coronavirus. Following the lockdown leads to a sharp deterioration of growth expectations. Uncertainty hovers over the impact of coronavirus on the stock market in the United States. A change in the growth expectations in one year can be computed directly using observed prices. The lower bound is completely forward-looking and requires a forecasting model. The massive impact of the coronavirus on the stock market in the U.S relies on the assumption that expected excess returns have increased. These considerations hold well when looking at the stock market in the U.S.
