Impact of Coronavirus on the US Economy
The coronavirus epidemic is a disruptive factor as far as the global economies are concerned. It has disrupted the global goods supplies, which has made it impossible for the US to ship in goods from abroad. This has caused the affected sectors to lay off workers; for instance, if an abroad company that uses products and services from the US gets affected, that means that the company in the US has to lay off some workers as there is no demand for the services and products. The paper will look at how COVID-19 has affected the US economy in general.
Impact of COVID-19 on US Unemployment
Most major cities have been forced to observe the social distancing measures all over America, and this has obviously affected most businesses more the hospitality and restaurant industry, which have resigned to closing the businesses. This means that many workers have been laid off or, in other cases, just temporarily halting their paychecks. It has contributed to a spike of unemployment in America; actually, as many as over 281,000 Americans have been left jobless a rise of over 70,000 thousand compared to a week earlier. The unemployment rate could continue to increase in the coming weeks as many businesses continue to close down and the solution for the virus being nowhere in sight.
Fiscal and Monetary Policies Due to COVID-19
Amid the rising coronavirus cases, the US federal government has activated various fiscal policies to help curb the pandemic as well as boosting the economy. The fiscal policy that the US government has used is expansionary since its expenditure is bigger than its revenue collection. The government has released US$250 billion, which will help to give or provide individuals with a one-time tax rebate. One advantage of this policy is that it creates a multiplier effect. And on the other hand, one disadvantage is that the increased activity in business may lead to inflation.
The one monetary policy that I think the US government has used is “reducing the reserve ratio” policy. The federal government has come up with ways to enhance the flow of credit; this is through facilities that perform various functions, for instance, the Commercial Paper Funding Facility that facilitates issuing of commercial paper by some companies. An advantage of this policy is that it is swift and can take a day to be effective. One of its disadvantages is that as much as it can stimulate the economy, it cannot influence the money supply.
Will the Economy Recover, and How fast?
To answer your question, I think the government has done well, and the congress is working on a stimulus bill that may reach up to trillions to help deal with the crisis. For instance, last month, President Trump signed an emergency measure that is worth $8 billion, which is aimed at helping the authorities that are fighting the pandemic and also allocated $3 billion for COVID-19 vaccine research. For example, the government also gave those students who have loans a break and waived all interests. So I think the government has done enough and is continuing to do more.
I believe the economy can recover after the coronavirus crisis comes to an end. Since the economy was in good shape before the outbreak of COVID-19, I think it can rise quickly to its former state. However, it will be a slow recovery as people will be cautious about running into restaurants bars and other social places, so the economy will recover eventually, albeit slowly.