Steve Schwarzman sees virus wiping $5 trillion from GDP
Social distancing measures put in place to combat the spread of the coronavirus are unprecedented and creating massive disruption in the business community, said Steve Schwarzman, chief executive officer of Blackstone Group Inc.
“Fortunately it’s going to be temporary but it’s putting stress on everything,” Schwarzman said in a Bloomberg TV interview with Alix Steel. “We have a GDP of somewhere around $21 trillion and we’re probably going to miss $5 trillion of it.”
The spread of the pandemic to the U.S. has halted the bull market and the economy, leading to the shut down of almost all commerce. The jobless rate jumped to 4.4% – the highest since 2017 – from a half-century low of 3.5%, and is expected to surge in the coming months. Bloomberg Economics sees the rate rising to 15% soon, while Federal Reserve Bank of St. Louis President James Bullard said it may hit 30% this quarter.
While all companies, including Blackstone, will feel some impact from the global pandemic, the pain will be temporary, Schwarzman said, citing the $2 trillion government stimulus package and predicting as much as $1.5 trillion more to come. The turbulence can also have an upside for firms with cash to deploy.
“There are very significant investments that can be made,” Schwarzman said, adding that his firm was “looking aggressively” to put some of its $150 billion in dry powder to use.
Blackstone on Monday said it would contribute $10 million to the New York State Covid-19 First Responders Fund which was established by New York Governor Andrew Cuomo to procure and distribute a range of materials including ventilators and personal protective equipment to health care institutions.
The firm will donate an additional $5 million to organizations that provide food delivery to health-care workers and first responders.