How is the US economy affected due to COVID-19 Pandemic?
The COVID-19 pandemic has struck countries across the world with a double edged sword. In one hand while it put the entire healthcare system at test, in other hand it brought economies crashing down. The United States of America was no different. While transactions stopped, businesses shut shops, jobs were cuts, sentiments and spending came crashing down, so did the economy.
Here’s a look at major indices of US economy and how they faltered due to the COVID-19 pandemic.
Employment: Reportedly, over 50 million people went out of jobs in US during the pandemic. This is due to a number of small and medium businesses shutting shops and big businesses cutting down their headcount. Unemployment claims crossed 1 million for over 19 consecutive weeks. With businesses still shaken up and demand at all time low, there is little chance of job market opening up anytime soon.
Consumer Spending: There was a weekly payment of $600 given to families under CARES Act. This helped families keep spending up even in times of distress. Consumer spending helps the economy stay up because when people buy, companies produce and when companies produce, jobs stay. But after July, the CARES act expired and was not renewed. This hit the consumer spending and the economy further.
In the April-June quarter the US economy took a historic plunge of roughly around 32 per cent annual rate, something that the country has not seen in its history. The worst drop America witnessed since a formal record keeping began in 1947 was in 1958 which was around 10 per cent. Compared to that a 32 per cent drop shows the massive hit the world’s most powerful country took during the pandemic season.
There are silver linings among the dark cloud. Not all had been bad though. There had been a few positives too, to look up to in the US economy story amidst the pandemic. The Big Technology companies showed growth during this time. Companies like Facebook and Apple had shown growth in double digits. Amazon’s earning also showed a rise in income, double last year.
Purchasing Manager’s Index (PMI), an indicator to the economy has shown positive growth. Manufacturing output stabilized as production facilities slowly reopened. S&P500 index also stayed positive, in fact recording best quarter in over last twenty years. Many see a light of hope in these signs.
Will the economy rebound?
The economists still are wary about how the future will look like. With the virus still playing havoc and causing loss of lives daily, with the rate of infection curve refusing to flatten across the world, with a vaccine not seemingly available for another two to three quarters, there is little chance of life getting back to normal anytime soon in US or any other country. Since in this globalised world, economies do not sustain in isolation, it’s difficult for the US economy to show any miraculous recovery all of a sudden.