As COVID-19, also known as the novel coronavirus, ravages across the global population, people are naturally scared for what the long-term ramifications of this disease could mean. While the health of the human race is the most important thing at the current moment, the ramifications the virus could have on the global financial state could be massive and overwhelming. As is the case with any natural disaster, the economic ramifications can long outlast the initial disaster itself. As of the time of writing, the U.S. is currently in its second week of social distancing, and the current economic system is already dire. With UMass Boston as well as nearly every educational facility in the U.S. converting to online classes within the span of one week, and many students entering or are already in the workforce, this economic downfall could have drastic effects on our generation.
COVID-19 is a type of coronavirus. As the CDC reports, “Coronaviruses are a large family of viruses that are common in people and many different species of animals, including camels, cattle, cats, and bats. Rarely, animal coronaviruses can infect people and then spread between people such as with MERS-CoV, SARS-CoV, and now with this new virus (named SARS-CoV-2) … Early on, many of the patients at the epicenter of the outbreak in Wuhan, Hubei Province, China had some link to a large seafood and live animal market, suggesting animal-to-person spread” (2). The CDC has done extensive reporting and research on the COVID-19 virus and their website answers many medical questions surrounding the virus itself. Aside from the clear medical aspects of the virus, the national shutdown occuring in the U.S. creates a great deal of concern for anyone interested in economic stability.
The New York Times covers this issue in an article titled “Why the Coronavirus Could Threaten the U.S. Economy Even More Than China’s.” While America’s economy continues in deep decline following the wake of the COVID-19 pandemic, evidence suggests that the economic recession that could follow may mirror the economic and financial status of the Great Depression. Austan Goolsbee for The New York Times reports, “ … face-to-face service industries—the kind of businesses that go into a tailspin when fearful people withdraw from one another—tend to dominate economies in high-income countries more than they do in China. If people stay home from school, stop traveling and don’t go to sporting events, the gym or the dentist, the economic consequence would be worse” (1). Social distancing has proven to lessen the spread of the virus by prohibiting people from interacting in large groups. However, social distancing has put a heavy strain on America’s economy, an economy that before the pandemic was quite stable and prosperous.
On March 26, the New York Times reported, “More than three million people filed for unemployment benefits last week … Just three weeks ago, barely 200,000 people applied for jobless benefits, a historically low number” (3). These staggering numbers shed light onto the detrimental state of the American economy at this current time. In a time with job growth, stable economic status, and relative political stability in the United States, the COVID-19 pandemic placed the American and global economies to a grinding halt. Non-essential stores such as clothing stores, technology stores, and many others shut their doors, and employees were consequently laid-off. Companies that haven’t shut their doors, deemed to be essential retailers such as Target, CVS, and Walmart, are paying their employees increased wages (4). However, for many social work, social clubs, gyms, and restaurants, decreased customers means decreased revenue, and many laid-off workers may have no choice but to apply for unemployment benefits from their respective state and federal unemployment agencies. Decreased economic activity across the U.S. could represent the beginning of a second Great Depression.
While many working families find themselves at the forefront of infection, the fact remains that currently more and companies are closing their doors for fear of getting widespread infections among their employees. In the short term, profits will be extremely limited, and middle class, working class, and even the high class of income earners may see shortages in food and income, as is already the case in many states. While the U.S. Legislature has not passed any substantial legislation surrounding a relief package, the details of a relief package are currently uncertain as the bill makes its way through the Senate and the House of Representatives. One thing is certain: with no end in sight to the Coronavirus pandemic, the long-term economic ramifications may reverberate several decades before the economy recovers, if and only if this pandemic is not dealt with swiftly in the next few coming months.