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COVID-19’s Economic Impact: Stats and Predictions

A Comprehensive Look at the State of the Global Economy

The world economy has been rocked by the COVID-19 pandemic, leading to devastating consequences. Today, we turn our attention to the economic impact of this pandemic globally and within the United States.

In this article, we will provide an overview of the predictions and statistics, beginning with the International Monetary Fund (IMF) economic growth predictions.

IMF Economic Growth Prediction

The IMF predicts that the global economy will contract by 4.9% in 2020. This is five times worse than what was observed during the financial crisis of 2008-2009.

Advanced economies are expected to contract by 8%, while emerging economies are expected to contract by 3%. The economic impact of the pandemic is expected to be widespread, hitting countries in the form of loss of jobs, increased poverty, and declining health outcomes.

As countries continue to struggle with the pandemic, governments and international organizations have responded with significant fiscal and monetary policies to mitigate the negative economic impact on households and businesses.

US GDP Quarterly and Annual Decline

The US, one of the largest economies in the world, has also suffered a GDP decline. Notably, the US economy shrank by 32.9% in Q2 2020, with GDP reaching its lowest levels since the Great Depression.

While a decline was expected, the severity of the situation has exacerbated the economic impact of the pandemic. Many businesses had to shut down, leading to millions of people losing their jobs and significant changes to the economy.

This includes the manufacturing, hospitality, and retail sector, which have all had significant job losses.

US Economic Output Decline

As the US experienced its worst economic decline since the Great Depression, it also saw a decline in output. Economic output in the US shrank at a record annual rate of nearly 33% in the second quarter of 2020 according to the Bureau of Economic Analysis (BEA).

Output from manufacturing fell by 98% during the same period, while output from retail and wholesale trade declined by 45% and 19% respectively.

Wages Decline

The pandemic has not only led to a decline in output and GDP, but it has had an impact on wages too. Reports suggest that wages are expected to decline in 2020 due to the pandemic.

Data shows that wage growth has been falling since the beginning of the pandemic and has continued to decline even after businesses have reopened. The decline in wages is particularly worrying at a time when people are struggling to make ends meet, with millions of people out of work.

Unemployment and Hiring Rates

The pandemic has resulted in high rates of unemployment, which have continued to rise in recent months. In the US, the unemployment rate stood at 10.2% in July 2020, with over 16 million people still unemployed.

This marks a significant increase from the pre-pandemic levels, where the unemployment rate was as low as 3.5%.

Hiring Rate Annual Decline

Along with unemployment, hiring rates have also declined, with many employers pausing hiring activities. Hiring rates declined by 7.5% in June 2020, leading to fewer job openings amid the pandemic.

In contrast to pre-pandemic times, where there was a race to find qualified candidates, employers are now holding back from hiring new employees due to the uncertainty of the current economic situation.

Furlough Increase

The increased unemployment rate has led to many employees being furloughed, with many businesses unable to pay salaries and wages. A furlough is an unpaid leave of absence requested by an employer.

The number of people furloughed increased by 2.6 million in July alone, marking a significant increase from pre-pandemic levels.

Conclusion

COVID-19 has had a significant impact on the global economy, with many countries seeing declines in GDP and output. Rising unemployment and a decline in hiring and wages have become a worrying trend in the wake of the pandemic as millions of people continue to struggle.

As governments and economic organizations work to improve the situation, it remains to be seen how long it will take for the economy to recover and get back on track. The pandemic has illustrated that crisis can happen at any time, and the importance of planning for emergencies is more apparent now than ever before.

Continuing the discussion of the impact of the pandemic on the economy, we turn our attention to the stock market and oil prices. We will also explore the increase in permanent business closures and food bank recipients, both of which illustrate the greater impact on individuals and communities.

Dow Jones Industrial Average Single-Day Decline

The Dow Jones Industrial Average (DJIA) is a benchmark index that tracks 30 blue-chip companies’ performances in the US stock market. The pandemic has caused the stock market to experience major declines that have affected investors and businesses alike.

One such decline was observed on March 9th, 2020, when the DJIA lost 2,013.76 points, the largest single-day drop in its history. This decline, coupled with the uncertainty surrounding the pandemic, led investors to become more hesitant in investing in the markets.

Price of Oil Monthly Decline

The oil and gas industry has been one of the hardest-hit sectors in the pandemic, with oil prices declining drastically. According to the US Energy Information Administration (EIA), the price of West Texas Intermediate (WTI) crude oil dropped to -$37.63 per barrel at one point in April 2020.

This drop was due to a combination of significant oversupply and a sharp fall in demand. The pandemic has led to a decrease in travel and industrial activity worldwide, leading to lower demand for oil.

Permanent Business Closures Increase

The pandemic has hit small businesses the hardest, with many facing permanent closures due to the economic strain. According to a report by Yelp, 60% of businesses that were closed on the platform due to the pandemic have now permanently closed.

This rise in permanent business closures has been attributed to a lack of government aid, social distancing guidelines, and declining consumer demand. Small businesses are particularly vulnerable to economic fluctuations as they do not have the financial resources to sustain prolonged periods of closure or decline in foot traffic.

Food Bank Recipients Increase

The pandemic has resulted in a significant increase in the number of food bank recipients globally due to rising unemployment and financial insecurity. As many individuals are out of work or have reduced working hours, the ability to afford food has become increasingly challenging.

In the US, the number of people relying on food banks to survive has grown exponentially, with the demand for food assistance growing to levels not seen since the Great Depression. Feeding America, the largest food bank network in the US, reported that it served an estimated 4.2 billion meals from March through August of 2020 alone.

Conclusion

The pandemic has impacted the global economy in unprecedented ways, with significant consequences on markets, small businesses, and individuals financial stability. While governments and organizations have responded with fiscal and monetary policies to mitigate the negative impact, many individuals and communities are still struggling to make ends meet.

The long-term effects of the pandemic on the economy remain uncertain. However, a more significant focus on emergency preparedness and resilience planning is necessary to adapt to current and future crises.

The pandemic has had far-reaching effects globally, and the United States has experienced its fair share of the devastation. In this article extension, we will delve into the increase in COVID-19 cases and deaths in the US along with the concerning wealth disparity.

US COVID-19 Cases Increase

Since March 2020, the US has been heavily impacted by the COVID-19 pandemic, with cases continuing to surge across the country. Reportedly, the country has recorded over 30 million confirmed cases as of March 2021, accounting for a quarter of the global cases.

The outbreak in the US initially began in hotspots in New York and New Jersey, but by the fall of 2020, the spread was across the US, with many states experiencing surges in cases and deaths. Additionally, the introduction of new variants has added greater concern regarding the long-term impact of the virus.

US COVID-19 Deaths Increase

As the cases have surged, so have the COVID-19 deaths across the US. The death toll has surpassed half a million in the country, with over 30,000 deaths reported in January 2021 alone.

Despite the development of vaccines and increased testing, the death rate has remained relatively high, a testament to the severity of the pandemic and its impact on the population. Increase in Wealth of America’s Billionaires

In the midst of this pandemic, some individuals have seen their wealth increase enormously.

In July 2020, it was reported that the collective wealth of America’s billionaires rose by over 637 billion dollars “or by 29% since the pandemic” began. The report suggested that this increase was largely because their stocks had held up so well, with some even benefiting from surges caused by the pandemic, such as Amazon’s stock increase due to changes society’s shopping habits.

Furthermore, the pandemic did not affect the investments made in stocks, which resulted in huge incremental gains.

Disproportionate Relief for Large Corporations

In contrast to the increase in wealth observed among America’s billionaires, large corporations have also been aided with COVID-19 relief funding. The $2.2 trillion CARES Act, COVID-related federal relief, and economic stimulus package was offered to support American households and businesses affected by the pandemic.

However, scrutiny fell on corporations that received parts of the relief funds and whether they deserved it more or instead of the individuals and small businesses they were supposed to aid. Notably, several large corporations that received the federal assistance had been facing declining financial stability before the outbreak, raising questions about the appropriateness of the relief funding channeling.

Conclusion

The COVID-19 pandemic has had significant economic consequences globally, affecting individuals and businesses alike. While some people have observed an increase in wealth, many individuals and small businesses continue to struggle to get by.

In the US, the pandemic has led to an increase in COVID-19 cases and deaths, which have caused a lot of control challenges. It has also highlighted disparities that have existed for a long time, including wealth inequality and the lop-sided recovery between large corporations and small businesses.

However, continued efforts across all sectors and the implementation of concrete strategies to address these disparities can ensure greater financial stability for all in the post-pandemic world. This article discussed the impact of the COVID-19 pandemic on the global economy and the United States, focusing on the increase in COVID-19 cases and deaths, the decline in GDP, the rise in unemployment rates and business closures.

It also highlighted the concerning wealth disparity, including the increase in wealth of America’s billionaires, and the disproportionate relief for large corporations. The pandemic has caused unprecedented economic devastation, affecting individuals and businesses across the world.

It has shown that future pandemics and crises are possible and should serve as a warning to businesses and governments alike to maintain and implement concrete strategies for addressing long-standing disparities. There is a need to work together and prioritize preparedness and resilience to ensure that individuals and communities can withstand and recover from any crisis they may face in the future.

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