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Impact of Covid-19 on the US Economy
Shawn B Hanks
Liberty University
English 101-B 07
Professor Shaun Curran
02-20-2022
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Introduction
The outbreak of covid-19 created a health and economic crisis by exacting pressure on
people, leading to the closure of major economic sectors in the country. The pandemic interfered
with the country's education, health, transport, security, manufacturing, and sales business that
constitutes a major economic part of the country. Although the economic growth of the United
States has been retarded in the last decade, the impact of covid-19 is severe. Sharif et al. (2020)
argues that “in the financial press, the COVID-19 effects are often compared with the Global
Financial Crisis (GFC) of 2008, which has been widely researched in interconnectedness,
contagion, and spillover effect literature” (p.1). Notably, covid-19 created an unprecedented
economic scale crisis in the demand, supply, and financial apparatus all at once (Sharif et al.,
2020). The voluntarily social distancing and other health guidelines by the department of health
and the WHO created a shuffle in different industries when people lost their job opportunities
while others feared for their lives and retracted to staying at home as they watched the crisis. The
essay argues that covid-19 had a detrimental impact on the US economy because companies
closed, people lost their employment opportunities, the increased cost of healthcare, and
negatively affected the consumer spending.
Background
Covid-19 is an infectious disease caused by the Corona Virus (SARS-CoV-2) identified in
China in 2019. Since its outbreak in China, the novel virus has undergone mutation appearing in
different forms, including the delta and omicron variants recently identified in different parts of
the world. Majority of patients who had covid-19 experienced mild symptoms that ceased to
exist within two weeks of quarantine without any specific treatment. However, the elderly and
patients who had other chronic conditions were highly affected because it increased their
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mortality rate. There is no known cure for the covid-19 disease, and many people in the intensive
care unit are treated using corticosteroids.
The covid-19 virus is spread through droplets. Scientists indicated that the droplets of
Covid-19 were too heavy to hang in the air, so they fell to any surface where they would last for
12-48 hours based on the nature of the surface material. The spread of covid-19 happens through
social contact, which facilitated the closure of social gathering places where people accumulated
in large numbers, including learning institutions and religious places. The fast spread of covid-19
led to the closure of essential services, including the movement of people and goods from one
region to another. The lockdown that was implemented in some parts of America was designed to
limit social interactions that were considered a major avenue for spreading the disease.
The suspension of crucial activities such as education closure of businesses and industries
happened in 2020 when the disease had highly razed the country. In the last ten months, the
country's economy has been reopening following the mass vaccination of adults in the country.
however, the impact of the disease is still felt in different industries.
Negative impact on economy.
The economic impact of covid-19 in the United States is immeasurable. It negatively
affected country's resourceful economic avenues such as manufacturing, production, and sales
that negatively affected the US GDP.
The outbreak of covid-19 in the United States caused an economic downturn. The
voluntarily social distances, the fear of the diseases, and the lockdown measures that were
implemented in different months of 2020 to counter the spread of the disease had a significant
impact on the decline of economic factors (Walmsley et al., 2020). The economic downturn
happened after the closure of businesses and industries, the small, merchandized enterprises
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closed their operations and government institutions, and corporations suspended their services
temporarily. The National Bureau of Economics and Research stated that the peak in the
economic activities in the United States was witnessed in February 2020, slightly before the
lockdown that marked the longest economic expansion since 2009. The transportation sector
closure highly affected the economy negatively. The transportation sector that has been used in
supplying products in different parts of the world was closed because of the restrictive measures
initiated in different countries (Walmsley et al., 2020). The manufacturing industries that
supplied different products to the global markets had to close because transportation was
impossible.
Covid-19 also created an unemployment crisis in the United States. The fear of dying or
getting infected made people resign from their jobs, while some were rendered jobless because
of the industrial shutdown. The shutdown of some industries in the United States was a
significant economic blow to people. People needed some finances to finance their lifestyle
during the lockdown. However, such finance was not there, and they were jobless. The reality of
the disease in New York forced people to close their SMEs and other merchandized businesses,
which rendered some people jobless. The ban on international transportation negatively affected
industries such as motor-vehicle, medicine, and technology that have employed millions of
Americans. “COVID-19–related job losses wiped out 113 straight months of job growth, with
total nonfarm employment falling by 20.5 million jobs in April” (Bauer et al., 2020, p.4). The
urgent need to stop economic operations created the biggest unemployment crisis in history.
“The collapse in employment is of an unprecedented magnitude and seems likely to rival or
exceed that of any recession in the last 150 years” (CEPAL, 2020, p.2). the closure of industries
and businesses affected workers and all people of different demographics equally.
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The outbreak of covid-19 caused a negative swing in household spending in the United
States. Miller (2020) argues that retail sales in the United States dropped by 8.7%, the highest
decline since the track of household spending started. The swings in household spending hurt the
economy because it shows people were afraid to purchase. A country that experiences a lack of
sales and poor household spending has the potential to decline economically because businesses
cannot operate without selling (Miller, 2020). When consumers stay away from the business,
they mean such businesses will be unable to pay their employees and debts that have an impact
on the economy. Most households in 2020 avoided spending on clothing and other needs that
they considered secondary needs.
The country also experienced reduced taxes as many unemployed people and industries
were not operating. Thus, the country had to use its reserve bonds and other alternative sources
to keep it afloat. The increasing deaths of people hurt the economy because people make the
economy as they contribute to the human resources required to grow the country's economy. The
government reserves were taken to bail out households of their healthcare problems and another
household spending that hurt people (Deb et al., 2021).
Counter argument
Covid-19 resulted in the reduction of organizational and household spending. The
outbreak of covid-19 resulted in remote working and conducting businesses at home (Kaushik &
Guleria, 2020). This activity reduced expenses that arise in working from an office like transport
costs every morning and evening, coffee at the office, lunch, and costs incurred in hiring
secretaries. Transferring offices from physical buildings to online activities made managers
become more technologically involved, where smartphone devices serve the role of the secretary
by reminding the manager of the upcoming meetings, helping the manager set the meeting, and
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responding to people online. Organizational activities and meetings are done online, which has
reduced organizational spending significantly, like cutting down meeting allowances and hotel
charges for the meeting. Covid-19 created an awareness in the institutions that they do not have
to meet manually with their regional managers. The meetings that cost institutions a lot of money
moving from their regions to the headquarters were scrapped off, which made the organizational
spending reduced that increased the organizational profit. Individuals have been operating
remotely from the comfort of their houses, significantly reducing transport costs and other costs
incurred in the office.
Covid-19 created new opportunities for people. There is no better way to express the
increased opportunities that were created online by covid-19. Losing jobs made people creative
where they joined online communities in different social media platforms where they became
brand ambassadors. Someone like Khaby Lame, who turned to TikTok, created an online
opportunity for him that has made him a world figure making millions from the platform. Such
opportunities would not have been uncovered.
Rebuttal argument
There is no doubt that covid-19 made people creative and helped them reduce their
household and organizational spending by making working remotely possible. However, the
disease created more economic problems that working remotely cannot be solved. The reduced
supply of groceries and other items cannot be done online. The transport sector is a significant
part of an economy that was negatively hurt by the disease. The manager and the director who
worked from home fired their secretaries who could not join other stalled industries. People
working from home caused the closure of a hotel next to their organization because they did not
eat from there, yet the hotel needed some money to pay their workers and other bills. With a high
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level of unemployment, institutions will also feel the impact because of the increased social
problems such as crime.
Conclusion
The outbreak and spread of covid-19 in the United States hurt the economy severely. The
voluntary lockdown, the shutdown of industries and businesses, led to the economic downturn,
high unemployment, and poor household spending that hurt the businesses. The international
business that has a significant take in the economy was negatively hurt caused the closure of
manufacturing and production industries like the technology and medicine sector in the United
States. these unfolding changes had a significant negative impact on the country’s GDP.
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References
Bauer, L., Broady, K., Edelberg, W., & O’Donnell, J. (2020). Ten Facts about COVID-19 and the
US Economy. Brookings: Washington, DC.
CEPAL, N. (2020). Impact of COVID-19 on the United States economy and the policy response.
Deb, P., Furceri, D., Ostry, J. D., & Tawk, N. (2021). The economic effects of Covid-19
containment measures. Open Economies Review, 1-32.
Kaushik, M., & Guleria, N. (2020). The impact of pandemic COVID-19 in workplace. European
Journal of Business and Management, 12(15), 1-10.
Miller, C. (2020, march). The Effect of COVID-19 on the U.S. Economy. Retrieved from
Foreigh Policy Research Institute: https://www.fpri.org/article/2020/03/the-effect-of-
covid-19-on-the-u-s-economy/
Sharif, A., Aloui, C., & Yarovaya, L. (2020). COVID-19 pandemic, oil prices, stock market,
geopolitical risk, and policy uncertainty nexus in the US economy: Fresh evidence from
the wavelet-based approach. International Review of Financial Analysis, 70, 101496.
Walmsley, T., Rose, A., & Wei, D. (2020). The Impacts of the Coronavirus on the Economy of
the United States. Economics of disasters and climate change, 1-52.
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