As the COVID-19 is spreading across the world at an even faster rate, people and governments are making some of the harshest decisions ever. To tackle the pandemic, the United States government locked down a large part of the country and people have reduced their spendings drastically. As a result, our economy is going through a dramatic change.
But exactly what kind of changes our economy is going through and what’s the future?
In this article, we’re going to talk about the 7 ways COVID-19 is impacting our economy and what the possible outcome can be.
COVID-19 Will Cause Health Care Crisis
We’re seeing a huge slow down in the economic sector all over the world because of the COVID-19. And as it can infect other persons quite easily, we can’t accurately predict how far it’s going to make everyone suffer including our economy. But we do know that it will definitely affect every country, state, and city. As a result, more and more people are getting sick.
And as the pandemic hurting every single industry, our health care industry is no exception to it. In fact, this global economic crisis is making maintaining healthcare serious economic trouble.
People are no longer getting permission to travel and go somewhere else. All the manufacturing has been halted. People who work in the supply chain are catching the coronavirus. And those who are still safe are showing increasingly more concern and are reluctant to work. And on top of that, healthcare professionals and doctors who are working 24×7 might need frequent self-quarantine because of the risk of infection.
Right now, keeping the people healthy and keeping COVID-19 at bay is one of the top priorities. And the administration has to make sure that they have sufficient resources to detect and tackle any new infection. More importantly, the authority has to make sure that the health care workers are getting sufficient economic help and resources to stay out of harm’s way. The health care worker must get paid sick leave or paid family leave. That’s the only way we can stop our healthcare crisis.
The Consumer Side Of The Business Is Affected
Because of this spread of the COVID-19 pandemic, the demand side of the business has been drastically reduced. People are not being able to go to their jobs. And many people might have to lose either their job or income as more and more companies are shutting down their operation. The investors are pulling their money back, the businesses are not running at full steam. Moreover, the export of different items is facing significant delays due to the pandemic.
Although there won’t be any effect in the supply chain, the lack of demand means many businesses might reach its end and fail. Those businesses that don’t have enough cash to keep running their operations will perish. Moreover, small and medium businesses, including businesses with a slim profit margin will take the hit.
The government must take measures to keep the consumer side of the business alive. And to do that, the government must focus to replace the loss of income of lower-class and middle-class families. And that’s because this group of people doesn’t have enough savings to effortlessly survive a few months.
COVID-19 Made Our Economy Uncertain
Although most of the people have understood that COVID-19 took a huge toll on the business and families, people are still unaware of the seriousness of the problem. As the virus spreading and disrupting our whole system, it’s causing a huge economic fallout. We still don’t know how worse the economic situation is gonna get. Also, we don’t who if the efforts to stop the virus will succeed or not.
And this very uncertainty of the future is causing the economic fallout. More and more businesses are stopping their operations. Not only because of a lack of consumer demand but also because they don’t know what’s gonna happen in the near future. As a result, more people are ending up either losing their job or income. In turn, they’re cutting off their daily spending to survive this emergency situation. Therefore, the uncertainty of future conditions is making the national economy fall down.
The Government Will Feel The Heat Pretty Soon
With the companies and other organizations are pulling their hands, the federal and state government will find them in the frontline pretty soon. As people will be depleting their savings, they’re going to rely on the government even more. Right now, businesses like restaurants, event venues, hotels are shutting down their operation. In return, people are losing their jobs. And on the flip side, the government isn’t getting their tax revenues.
Although each state or locality will be affected by it differently, every single one of them is sure to feel the heat. And as time goes, the government will find it harder to support their local businesses and the community. Soon enough, the state and locality have to decide between supporting the businesses and families. And this is going to be a tough one.
The COVID-19 Revealed Economic Inequality
We already know that the economic inequality among the working-class Americans and the high-income people is too high. But the current COVID-19 pandemic has truly shown how dangerously high this difference is. As a general rule of thumb, working-class people, African-American, people who live in a rural region earn a lot less than whites or high-income peoples who have a college degree and lives in an urban region.
And this inequality is even more visible during this COVID-19 time. Low-wage workers not only earn a lot less money, but they also have a lot fewer job benefits.
They have fewer paid sick leave and even fewer health benefits. And due to this pandemic, these people are losing their income, working in a risky environment, and facing a big amount of healthcare bills. On top of that, they have a lot less saving which will deplete in a flash. And to make the matter worse, they’re getting behind their household bills and have less access to unemployment benefits.
The Focus On Stock Market Isn’t Doing Any Good To Normal People
It’s true that the COVID-19 created a lot of problems for the stock market. In fact, the stock market is facing constant downfall in the last few weeks. And while it’s okay to worry about the stock market, taking care of the millions of American families should be the top priority. Unfortunately, that’s not the case here right now. In this COVID-19 pandemic, the Trump administration is focusing more on Wall Street than American families.
The fact is that most American families have no stock in Wall Street. And the downfall or uprising of stocks won’t make much difference in their lives.
But it doesn’t stop here. federal government’s focus on the stock market and the efforts of stabilizing it will make things more problematic for regular Americans. Many companies whose stocks are trading in Wall Street already have a lot of funds to survive this pandemic and flourish after it. So, trying to give them a one-time tax break is a rather incompetent use of money. That’s because most of them will survive this pandemic without this help.
So, right now, the government must focus more on the families than the stock market. Plus, to help the businesses survive this COVID-19 pandemic, they should selectively fund the companies that are in immediate need.
Also, The Fed Has A Limit To How Far It Can Stretch
To tackle the economic downfall that is happening because of the COVID-19, the Fed has cut down the interest rate to zero. While it might seem like a great move, it won’t really help us tackle the current situation. The fact is that the interest rate for home’s mortgage and a business loan is quite low. And on top of that Fed’s interest rate doesn’t apply to car loans, student loans, and other private loans.
On the other hand, the large companies have gathered a total of $4.7 trillion liquid money in total. And the businesses aren’t really looking to invest their money either as they’re saving it for the rainy day. So, the Fed’s lower interest rates won’t make any difference.
Thus, the Fed’s move will stop additional credits from stacking up, it’s not quite enough to make the economy stand tall again.
As the number of people suffering from COVID-19 is consistently rising, the domestic economy, as well as the world economy, is experiencing a huge downfall. The businesses are shutting their operations down, people are losing their jobs, and the consumers are sticking strictly to the basic needs.
As a result, healthcare is facing a huge crisis. The governments are being pushed to its limits and the Fed’s being forced to cut off the interest rate to zero.
To make sure the situation doesn’t become any worse than it already is, the administration has to take strict measures and ensure the safety of everyone. The coronavirus won’t be here forever and we’ll eventually get over it. But it will surely change our outlook towards the global economy.
Disclaimer: The information above should not be considered a medical recommendation. The content is written to enrich the reader’s knowledge. Any use of materials and content mentioned in this article should be first consulted about by a physician.