Economic Recovery

The Economic Recovery from COVID-19 Lockdowns:

Sam Wietrzny

    2020 has been a rollercoaster of a year filled with plenty of uncertainties and questions in response to the pandemic that has affected the world. While COVID-19 has affected many global citizens from a health standpoint, or from a societal standpoint, the virus has had major effects on nations’ economies. Particularly speaking, any country that had pursued and implemented the full lockdown system. Due to the U.S. being one of these countries that had implemented a full lockdown system there have been a lot economic repercussions. The U.S.’s employment rate had drastically dropped, many businesses were forced to close, and there was a huge lack of demand for services from the public during this time. However, more interesting than the decline of the economy during this period of time, is the recovery and economic growth the economy has from its lowest point. While there are a lot different economic categories and classifications that make up an economy as a whole, the three that stand out during this time of recovery are unemployment rates, businesses, and GDP (Gross Domestic Product).

    In the years leading up to 2020 the U.S.’s unemployment percentage had been decreasing, leaving less people unemployed. However, due to the CoronaVirus outbreak, the unemployment percentage had spiked from 4.4% in March to 14.7% in April. This is a drastic change in unemployment and it was mainly due to the lack of demand businesses had for employees. Along with this, many companies were not receiving excess demand for services meaning that they had to make a trade-off, the company going under or letting some employees go. Since the data listed above in April, the unemployment percentage has since dropped back down to 8.4% in August. According to marketplace.org, they state, “The labor department’s figures show employers are bringing back workers, and the unemployment rate fell to 13.3%, down from 14.7% in April.” The 13.3% that was used is in relationship to the month of June, but still gives us another example of the downward trend that is happening with unemployment rates. This shows that the U.S.’s unemployment rate is recovering after the effects of the CoronaVirus and may still take a while to drop back down to the consistently low percentage that was before the virus. 

    During the nationwide lockdowns many businesses, specifically small ones, were receiving very little demand for services. Restaurants were closed, people were staying at home, and most people only left to get groceries for the next week. According to pnas.org, they had conducted a survey of 5,800 businesses and monitored them throughout the lockdowns, “Across the full sample, 43% of businesses had temporarily closed, and nearly all of these closures were due to COVID-19.” The article then goes on to state how it was mainly due to the reduction of demand and employee health concern, meaning supply chain disruption was less of a factor. After the heat of the CoronaVirus businesses are still struggling to reopen their doors and recover from the lockdowns. According to mercatus.org, “The U.S. Congress passed the CARES Act, a $2 trillion stimulus package that set aside $349 billion for loans to small businesses. Owing to the number of applicants, Congress has already had to nearly double that amount to $670 billion.” There are both positives and negatives that arise from these loans. The fact that the U.S. government is trying to distribute loans is reassuring as it may allow many businesses to reopen, however, many of these small businesses will be paying off these loans for years to come leaving them with another financial burden they must weigh. The recovery process for businesses has begun, but will take much longer and will turn around much slower than expected. 

    The final thing that has been affected quite seriously by the CoronaVirus is the US’s GDP. The effects of the CoronaVirus on the U.S.’s GDP have been the greatest decline since the Great Depression. Due to unemployment, businesses failing, and loss of trade, the U.S. has been hurting from the months of lockdown that occurred. According to weforum.org, “Gross domestic product collapsed at a 32.9% annualized rate last quarter, the deepest decline in output since the government started keeping records in 1947.” This big of a drop in GDP is very rare and very bad for the U.S.’s economy overall. The U.S. releasing stimulus packages have really helped prevent it from going any lower. According to reuters.com, “More than five years of growth have been wiped out. With the recovery faltering, pressure is mounting for the White House and Congress to agree on a second stimulus package.” There is very little recovery from the crash in GDP since the end of lockdowns. Many recommend the idea of proposing another stimulus package to help more businesses and unemployed to ensure they can make it through the thick of this problem. On top of this, there is fear of a resurgence of the virus causing GDP to go down even more. There is a lot of uncertainty of what is going to happen next in terms of GDP, and so far there has not been a lot in the way of recovery in this specific area of our economy. 

Recovering from the international pandemic is proving to be harder for certain areas of the U.S.’s economy than others. Overall almost every single part of the country’s economy was affected by the CoronaVirus and had left major ramifications. The U.S. government is proving that they are working hard to ensite economic growth and restore the economy to its original position. With the rise of employment and the help to businesses that our government is providing it should prove to up the GDP and raise the overall U.S. economy. No government, country, or person could have predicted the effects that the CoronaVirus would have had and instead of focusing on what had happened it is better to look to the recovery of economies at this time. 

Works Cited 

Bartik, Alexander W., et al. “The Impact of COVID-19 on Small Business Outcomes and Expectations.” PNAS, National Academy of Sciences, 28 July 2020, www.pnas.org/content/117/30/17656.

Mutikani, Lucia. “COVID-19 Crushes U.S. Economy in Second Quarter; Rising Virus Cases Loom over Recovery.” Reuters, Thomson Reuters, 30 July 2020, www.reuters.com/article/us-usa-economy/covid-19-crushes-u-s-economy-in-second-quarter-rising-virus-cases-loom-over-recovery-idUSKCN24V0FO.

“Small Business Recovery after COVID-19.” Mercatus Center, 7 May 2020, www.mercatus.org/publications/covid-19-crisis-response/small-business-recovery-after-covid-19.

“Unexpected Drop in U.S. Unemployment Helps Markets Rally.” The New York Times, The New York Times, 5 June 2020, www.nytimes.com/2020/06/05/business/jobs-report-stock-market-coronavirus.html.

“United States Unemployment Rate1948-2020 Data: 2021-2022 Forecast: Calendar.” United States Unemployment Rate | 1948-2020 Data | 2021-2022 Forecast | Calendar, 2020, tradingeconomics.com/united-states/unemployment-rate.

Written by Lucia Mutikani, Correspondent. “What to Know about the Report on America's COVID-Hit GDP.” World Economic Forum, 11 July 2020, www.weforum.org/agenda/2020/07/covid-19-coronavirus-usa-united-states-econamy-gdp-decline