Covid-19: impact on the US Economy
The coronavirus 2019 disease (COVID-19) pandemic has disrupted health services and created an economic crisis in the United States. As of October 20, 2020 there have been more than 8.3 million confirmed COVID-19 cases and more than 222,000 deaths in the United States (John Hopkins University). As the number of coronavirus infections and deaths spike, the U.S economic recovery stalls. The impacts of the coronavirus are wide-ranging and relentless: hospitals are overtaxed, unemployment has reached its highest, and daily life is on an indefinite pause.
Getty/David Dee Delgado
A traveler wears a medical mask at Grand Central Terminal, March 2020
By August 28, 2020, the Internal Revenue Service (IRS) had issued about 153 million direct payments to Americans — totaling nearly $269 billion — to help mitigate the financial burden of the COVID-19 pandemic (Peter G. Peterson Foundation, 2020). With government aid to small businesses, the nation's firms and unemployed are either expired or struggling to survive. More than 50 million people are unemployed as businesses shutter permanently and restrictions prolong. That leads to Americans exhausting their jobless state benefits and moving onto federal programs for longer-term support. The U.S economy suffered its hardest blow ever since the Great Depression and economists say without the fiscal package of nearly US$ 3 trillion, the situation could have gotten much worse.
According to the U.S. Labor Department’s jobs report for September, it appeared that the improvement in the labor market was losing steam. Employers added 661,000 jobs during the month, which is down from 1.5 million in August, and far below the 4.8 million jobs added in June (U.S Bureau of Labor Statistics, 2020). The unemployment rate increased to 7.9 percent, as a result of nearly 700,000 people leaving the labor force. Gus Fascher, chief economist at PNC Financial in Pittsburg, stated that “Tens of millions of workers have lost their jobs over the past few months and remain unemployed, and the pace of improvement in the labor market has slowed”.
What's next?
It seems highly unlikely that things will revert to normal instantly as we'll probably be avoiding large gatherings for a while. Recovery is possible but not guaranteed to happen any time soon - and the biggest fear is that the current economic slump will continue to persist for years after the coronavirus is contained. Hopefully, the recovery will be V-shaped which means a quick bounceback so that we are all allowed to leave our homes. However, that depends heavily on how the virus progresses and the vaccine development. Nearly 60,000 new cases are recorded daily, stressing the difficulty of a full economic recovery without a vaccine. “The economy cannot get permanently back on track if there’s the possibility of a person carrying this virus, going to a movie theater or a restaurant or a sports stadium could spread the disease all over again.”, said William Poole, former president of the St. Louis Fed.
There will be an end to the current economic recession at some point. But the pandemic is going to forever alter the American social economy, as well as the rest of the world.