COVID-19 Has Sickened the U.S. Economy… Will It Get Healthy?
There is no way to overshadow the human toll COVID-19 has taken on Americans.
As of this writing, more than 4.3 million people in the U.S. have tested positive for the virus. The actual number is probably much higher. And some 150,000 Americans have died during the pandemic.
If things were improving, perhaps we could take solace in that fact. But they continue to worsen.
And while nothing is more important than our health, there is another victim of the coronavirus. That’s the U.S. economy.
$16 Trillion in Losses?
Over the next 10 years, the U.S. economy could lose $16 trillion. That’s an estimate from the Congressional Budget Office.
The reasons are obvious. Many companies have gone out of businesses. Others have had to cut staff and hours of availability.
Many citizens are holding back on spending. Either because they’ve lost jobs or are afraid their income will soon take a hit.
There is a general consensus that this virus is not going away anytime soon. And that impacts business investments.
One of the industries particularly hard hit is travel. Specifically, airlines. Thousands of flights have been cancelled due to travelers choosing to stay home. Or drive to their destinations.
Airlines and airports are doing everything they can to convince people it’s safe to fly. They require facemasks for staff and passengers. And have imposed new cleaning procedures.
They also insist on social distancing during flight boarding and block middle seats. Robots are cleaning terminal floors. And passengers’ temperatures are being taken.
Even people who are not concerned about flying during the pandemic must consider the fact that they may have to quarantine for 14 days at their destination. And the announcement that thousands of TSA agents have tested positive for COVID-19 didn’t help.
Surges Limit Group Gatherings
Another industry that has suffered during the pandemic is the restaurant business. Many of these establishments had to halt in-store dining for a couple of months.
Some of them attempted to partially compensate with carryout orders. And eventually with outdoor dining options. If they had the space. But the struggle continues as the virus surges again in many places.
Every business dependent upon people gathering in groups is hurting right now. Either because lawmakers have shut them down or because people are shying away from them.
These include hotels, theaters, concert halls and convention centers. Plus sports venues, museums, theme parks and zoos. As well as gyms, cruise ships, casinos and clubs.
Economy Entwined With Virus
Reopening the economy had to happen at some point. But many people are now questioning if some states reopened too soon and too quickly.
Nearly one-half of the 50 states have paused or reversed their reopening as a result of health concerns.
Joe Brusuelas is the chief economist at RSM International. It’s a network of accounting firms. Here’s what he said about the situation.
“The premature reopening of the U.S. economy has resulted in an intensification of the pandemic. Which is now causing growth in the economy to slow.”
Retail Stores Closing
A number of big box retailers have shut down some of their stores. And reduced hours at other locations. Including 200 Target stores.
Walmart and CVS have done the same. Recent protests and riots caused some companies to scale back deliveries in certain areas.
Some struggling businesses have opted for the federal government’s Paycheck Protection Program.
It is designed to keep workers at small businesses employed. But if the work goes away due to consumer caution, there’s nothing for those employees to do.
Near Future Looks Bleak
So, what does the future look like for the U.S. economy? The unsatisfactory answer is that nobody knows. But right now it’s not looking good.
Restaurants that were starting to recover after the reopening are now faltering again. Reservations are down 100 percent compared to a year ago.
The retail rebound has slowed as well. Nearly 25 percent of small businesses in the U.S. have closed. Overall spending is crawling. And first-time unemployment benefit applications are rising.
Economists at Bank of America wrote this chilling statement to their clients last week. “It is clear that the path of the economic recovery cannot be disentangled from the path of the virus.”
Pinning Hopes on a Vaccine
Scott Kirby is the United Airlines CEO. He said his airline does not “expect to get anywhere close to normal until there’s a vaccine that’s been widely distributed to a large portion of the population.”
If that’s true, the wait could be a long one. Lazard, an asset management company, conducted a recent poll.
It revealed that 73 percent of healthcare industry leaders estimate a vaccine won’t be widely available until at least the second half of 2021.
As I’ve said before, the race to get through this pandemic is a marathon, not a sprint. Please take care of yourselves.
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