Richard Baldwin has a nice post on VoxEU on the effect of COVID-19 medical shock on economic crisis. He argues that this economic crisis is different because it has hit all the G7 economies and China at the same time and from multiple fronts. Here is his depiction of the famous circular flow of income diagram and how the medical shock is disrupting flow of goods & services and money.
There is a combination of a supply and a demand shock. It is leading to expectations dampening and hysteresis. Bond prices and stock prices are moving in the same direction (not usual) and normally liquid assets are freezing up. Even gold futures have been falling. Risk averse behavior of households and business across investment and saving assets. Gripping uncertainty.
