What started as a promising year quickly turned into an economic blood bath for the United States. Small businesses are losing money, millions of Americans are out of work, and the medical system is overcapacity in several jurisdictions nationwide. The biggest story surrounding the COVID-19 global pandemic has been the economic fallout around the world, including in the U.S. So, how bad has it been in the Land of the Free? And will it ever fully return to normal?
The U.S. stock market exhibited symptoms of the Coronavirus toward the end of February, but it did not start breaking down from COVID-19 until March madness arrived. An ocean of red ink swallowed the New York Stock Exchange whole, shedding trillions of dollars in corporate valuations. The volatility was so immense and the losses were so huge that trading halted four times on the Dow Jones Industrial Average, the Nasdaq Composite Index, and the S&P 500 in a week. The Dow suffered two of the biggest single-day percentage drops since 1929, resulting in the wipeout of all the gains since President Donald Trump came into the White House. It became so depressing that the Federal Reserve slashed interest rates to 0% and introduced an unlimited asset-buying program called quantitative easing.
In response to the pandemic and to prevent the further spreading of the outbreak, an enormous wave of stores and offices temporarily closed their doors. Many businesses that have been deemed essential, such as supermarkets, have reduced their hours. Apple closed all its locations in the U.S. and Canada, Nike confirmed its stores would be shuttered in several countries, and Walmart’s 24-hour locations will be closed overnight for the foreseeable future.
Although many of these companies have established dates of when they plan to reopen, a lot of experts are warning that it is highly unlikely that most of these businesses will restart operations anytime soon.
Since consumer spending accounts for two-thirds of the U.S. economy, this is a huge hit to growth.
Initial Jobless Claims
Experts had forecast that initial jobless claims for the week ending March 21 would come in at around 1.1 and 1.5 million. Official Department of Labor numbers clocked in at a record 3.283 million, up from the previous week’s 280,000. To put it into perspective, the highest the reading had ever been was 695,000 in October 1982. The second highest was at the peak of the Great Recession with 665,000.
Lights Out in Sports
The sports world came to a screeching halt, costing billions of dollars to the economy. The National Basketball Association, the National Hockey League, and Major League Soccer suspended their seasons. Major League Baseball has postponed the 2020 season. World Wrestling Entertainment moved WrestleMania and all its television programming to its Performance Center in Orlando, FL. It is unknown if things will resume anytime soon.
Stimulus to the Rescue?
The U.S. government has extended a lifeline to the private sector, arguing that businesses should not suffer due to something out of their control. To keep companies open and Americans employed, Washington put forward a $2 trillion stimulus package that includes tens of billions of dollars in loans, loan guarantees, investments, and grants for Corporate America. This is expected to cushion the blow that businesses – large and small – have endured since the virus broke out across the country.
Should the virus overstay its welcome, this stimulus package might only serve as a band-aid. However, if it is seasonal and vaccine makers develop a solution before the much-discussed second or third wave, then this could serve as the life raft on the titanic.