What started somewhat like a “hoax,” has become a serious problem in the U.S. economy. Business activities and other types of activities have practically come to a halt as a result of the COVID-19 virus.
The current coronavirus outbreak is arguably nothing like the U.S. and the world have seen in decades. Americans are now facing both health and economic crises as a result.
The government has been forced to announce restrictions, including travel restrictions, in a bid to stop the fast-spreading pandemic. People are being asked to stay at home and maintain social distancing, measures that are greatly affecting the economy.
The ongoing epidemic looks to be shaping up to cause the biggest economic disruption since the Great Depression, except appropriate measures are taken to battle it.
U.S. Economy Tanking
The number of infections with the COVID-19 virus seems to be surging by the day in the U.S. More than 1,000 people in the country have died as a result of the infection, according to reports.
Some people have accused the American government of being too slow to take drastic actions to curb the spread of the virus.
The stock markets are down as panicked investors try to protect their money. Some major indexes have seen their biggest one-day declines in many years, or decades, as a result of this outbreak.
There is a “supply shock” as the closing of factories and retail stores as well as worker quarantines take a toll. There is also a drop in demand as people observe movement restrictions and social distancing while also having fears of being infected.
The economic effects of the coronavirus are somewhat reminiscent of those that led to the great recession of some years ago. There is an obvious drop in consumer and investor confidence, putting people out of work and threatening growth.
A major concern now is that the pandemic might have a greater adverse effect on the U.S. economy than it had on that of China, where it started. This is because America depends more on service-based businesses, such as travel and hospitality. Movement restrictions and social distancing practically will certainly put many people in these sectors out of work.
Outbreak Exposes the Shortcomings of the American Health System
Some weeks ago, the novel coronavirus was mainly a China problem. U.S. President Donald Trump even called it the “Chinese virus.”
However, the number of new cases in the Asian country has dropped greatly. The U.S., by contrast, is now reporting several times more new cases – there is the fear that things could even get worse.
It may be argued that China succeeded in cutting new cases very much because of the type of government it practices. It took some measures that people might contest in America if such were to be taken to check COVID-19.
The Chinese government, for instance, can easily quarantine whole cities without being questioned, an Economic Times article states.
Another thing that also helped China, according to the publication, was that more of its people do not live in urban areas, compared to the U.S. Experts say diseases tend to spread faster in urban areas as a result of a higher density of people.
But beyond all this, the state of the health system in the U.S. is a major concern with the coronavirus. Many people do not have access to quality health care.
In America, millions of people work on hourly jobs. The implication is that they may not earn anything when there is no work. These groups of workers are among those less willing to stay at home when sick and less likely to seek proper care. They are, therefore, at a greater risk of COVID-19.
The coronavirus pandemic exposes the defects of the health system in America. For instance, a large number of Americans do not have any or adequate insurance to fall back on when they are sick. Also, the out-of-pocket costs that people often have to pay are among the highest in the world.
Therefore, most of the uninsured are unable to seek proper care when they are sick simply because they cannot afford it. This tendency may likely still not change with the ongoing pandemic.
Dylan Scott states in a Vox op-ed that “America was less prepared for a pandemic than countries with universal health systems.” The rollout of testing was rather slow and the numbers of doctors and hospital beds available were also inadequate to combat the epidemic.
Testing is vital for people to know if they have the coronavirus. Some people may have it and not show symptoms while infecting others all the while. Slow rollout of testing in the U.S. may worsen the crisis, Scott wrote.
COVID-19 is a disorder that requires prompt medical attention. Sadly, some people who have it may not visit a doctor because of high out-of-pocket costs for medical care.
The current crisis might further boost the popularity of Democratic presidential hopeful Bernie Sanders. The senator from Vermont has been clamoring for universal healthcare. To him, this should be a basic right of every American.
While a universal health system might not be a failsafe shield against a crisis such as the one, it could enable more people to access medical care when they need it.
A “New Deal” Necessary
It may be said that America has not been confronted with a threat like the coronavirus epidemic since the 1930s. It currently has to combat both a health crisis and an economic crisis at the same time.
Some experts are saying measures similar to those taken in the 1930s after the stock market crashed may now be needed.
With uncertainty over the virus and government actions, investors have sent the stock markets tumbling down. The S&P 500 has slipped to its lowest since Trump took office. Gains in the Dow during the president’s tenure so far have practically been erased.
In an op-ed for CounterPunch, Ed Rampell stated that the U.S. economy needs something like the New Deal of President Franklin Roosevelt to overcome the present challenges. It took that massive intervention by Roosevelt’s administration to help America bounce back from the Great Depression.
Although he has the powers, Trump’s ability to be as effective as Roosevelt is doubted by some. This is partly because the president has never really been a fan of Big Government, although that now appears to be changing. He has been quoted as saying that Sanders is popular because “people like free stuff.”
However, the Trump administration recently announced a $2 trillion stimulus package to cushion the effects of the pandemic on the economy. Single Adults would get $1,200 under the deal while married couples earning no more than $150,000 and having no children would receive $2,400, CNN reports. Married couples with children get an extra $500 for each child not older than 16.
The new stimulus bill also requires the Department of Education to suspend student loan payments without penalty. This would remain so until September 30.
Unemployed people would receive an additional $600 every week for four months. The Treasury will also run a $500 billion lending program, among other palliative measures, according to CNN.
Crucial International Cooperation Looks More Difficult Now
It took concerted efforts by different countries for the global economy to rebound from the 2008 economic crisis. The kind of unity seen back then seems to be missing right now. Each country focuses more, if not entirely, on its economy these days.
It can be said that the U.S. has isolated itself more under the Trump administration. It is also now having a trade war with China, which used to be its ally on matters of global importance.
China played a critical role in ending the 2008 crisis through its record increase in spending. Some experts argue that things might have taken a turn for the worse in global markets without this action.
Today, the quality of unity in Europe back in 2008 is also no longer there to worsen matters. Leaders on the continent do not seem to have that unity anymore, following Brexit.
Ian Goldin, an economist, stated in a New York Times op-ed that increasing liquidity in the markets, as the government did during the 2008 economic crisis, will not save the U.S. economy this time. There is already too much cash in the markets. International cooperation is essential now, according to him.
The global economy is no longer as it used to be decades ago. Countries depend on one another in more ways now than they have ever done – what affects one economy may affect another in some way. This highlights the importance of global cooperation to end the threat of coronavirus.
Opinion | Just How Bad Could a Coronavirus Recession Get? – The New York Times (https://www.nytimes.com/2020/03/12/opinion/coronavirus-economy.html)
A hundred years on, will there be another Great Depression? | Business | The Guardian (https://www.theguardian.com/business/2020/mar/21/100-years-on-another-great-depression-coronavirus-fiscal-response)
Why the Coronavirus could threaten the US economy even more than China’s – The Economic Times (https://www.economictimes.com/news/international/world-news/why-the-coronavirus-could-threaten-the-us-economy-even-more-than-chinas/articleshow/74535695.cms)
Meet the New FDR – Franklin DONALD Roosevelt? – CounterPunch.org (https://www.counterpunch.org/2020/03/20/meet-the-new-fdr-franklin-donald-roosevelt/)
The Covid-19 coronavirus exposed weaknesses in the US health system – Vox (https://www.vox.com/policy-and-politics/2020/3/16/21173766/coronavirus-covid-19-us-cases-health-care-system)
What’s in the $2 trillion stimulus package – CNNPolitics (https://edition.cnn.com/2020/03/25/politics/stimulus-package-details-coronavirus/index.html)