3 Economic Effects Of Coronavirus On The Economy Of United States Of America
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3 Economic Effects Of Coronavirus On The Economy Of United States Of America
Unemployment Surge
Another significant and perhaps the most direct consequence of the coronavirus on American society was an increase in unemployment rates. With the shutdowns and restrictions on social contacts, many companies had to either shut down or scale back their operations, meaning millions lost their jobs (Alfaro et al., 2020). The unemployment rate rose to skyrocket to a high of 14. from 2. 5% in April 2020 to 8%, the highest record since the Great Depression (Petrosky-Nadeau & Valletta, 2020). This was a general increase in unemployment, which affected various areas. Most people came to financial hardship; thus, they had to rely on their unemployment benefits and other government programs. Purchases, a critical factor in the United States economy, were reduced as consumers saved more due to increased uncertainty. Tarzan added that this decline in consumption deepened the economic slump, thus forming a cycle of reduced demand and job loss.
Impact on Small Businesses
Being the main actors in the U. S. economy, small business owners were among the worst impacted by the pandemic. Many small businesses have low cash reserves, which pose risks to lo, such as a lack of cash for long periods. COVID-19 affected many companies, especially those in the services industry, such as the tourism and retail trade and personal services. The government’s response was to launch measures such as the Paycheck Protection Program (PPP) that offered loans to ensure employees of small companies stayed working (Wang & Kang, 2023). Although such steps helped curb the problem, many small businesses remain insolvent. Some of them had to shut down permanently, affecting employment opportunities and the liveliness of neighbourhoods. The effect on SMBs also revealed equity issues, especially for Black-owned businesses that struggled to obtain relief funds.
Acceleration of Digital Transformation
COVID-19 caused specific sectors of the U. S. economy to increase their digitalization levels in the last year. When social distancing became the new reality, the contact between individuals, as well as between businesses and customers, as well as the purchase of goods and the provision of services shifted online. E-commerce activities increased tremendously as firms like Amazon found it easier to sell their products online as people bought everything from necessities to luxury products. In addition, COVID made remote work a norm rather than an option for many organizations, thus increasing the utilization of technologies for working from home (Al-Habaibeh et al., 2021). The implications of this shift are even more profound in the long term as business entities start questioning their offices and the ability to sustain a remote or hybrid workforce after the pandemic. Other industries, like telehealth, also continued to grow because patients and doctors preferred virtual consultations.
This digitization process helped and hindered the situation. While it encouraged the growth of innovation and efficiency, it also exposed and aggravated the issue of the Digital Divide that exists in the country, where people of lower income and from rural areas do not have adequate access to high-speed internet and digital tools.
Conclusion
In conclusion, the coronavirus pandemic tremendously influenced the US economy and its further development regarding employment, small business, and digitalization. The high unemployment rates exposed flaws in the labour market and the effects of poor support systems for struggling small businesses. On the same note, the digitalization process fast forwards growth opportunities but comes with emerging issues that need to be resolved to facilitate inclusive recovery by policymakers and businesses. It will not be debatable to conclude that these economic repercussions of the COVID-19 pandemic will influence the American economy in the future as it adapts to the new normal.
References
Alfaro, L. A. U. R. A., & Jeong, S. A. R. A. H. (2020). COVID-19: the global shutdown. Harvard Business School case, 320-108. https://www.indiaassignmenthelp.com/uploads/1652205823COVID%2019%20The%20Global%20Shutdown.pdf
Al-Habaibeh, A., Watkins, M., Waried, K., & Javareshk, M. B. (2021). Challenges and opportunities of remotely working from home during the Covid-19 pandemic. Global Transitions, pp. 3, 99–108. https://www.sciencedirect.com/science/article/pii/S2589791821000165
Petrosky-Nadeau, N., & Valletta, R. G. (2020). An unemployment crisis after the onset of COVID-19. FRBSF Economic Letter, 12(1), 1-5. https://www.frbsf.org/wp-content/uploads/el2020-12.pdf
Wang, Q., & Kang, W. (2023). Small businesses and government assistance during COVID-19: evidence from the paycheck protection program in the US. Environment and Planning A: Economy and Space, 55(8), 2147-2165. https://journals.sagepub.com/doi/abs/10.1177/0308518X231166407