Fact: The American economy fell 4.8% in the first three months of 2020.
More facts: The Bureau of Economic Analysis (BEA) reported that the annual Gross Domestic Product (GDP), the value of all goods and services produced in the US, was $191.2 billion lower than it was in the last three months of 2019. The agency attributes this to the spread of COVID-19 and subsequent stay-at-home orders. Some of the most recent numbers illustrate the largest GDP decline since the fourth quarter of 2008 when the economy shrank 8.4%.
What effect is the coronavirus having on jobs?
In the US, the world’s largest economy, more than 26 million jobs were lost over the last five weeks. The country’s unemployment rate of 4.4% in March was the highest since August 2017, according to the Bureau of Labor Statistics.
Jobless claim filings continued at a historically unprecedented pace in April with 4.4 million new signups for unemployment insurance in one week, bringing the total of the past five weeks to 26.4 million, said the Labor Department.
The number represented a decline of 810,000 from the previous week, but the five-week total has now surpassed all of the job gains since the Great Recession.
What effect is the coronavirus having on the economy?
A simple look at the stock market will tell you that coronavirus has led to a volatile economy, but there are numerous other factors at play.
The initial outbreak of the coronavirus in China disrupted global supply chains. A record 3.28 million Americans filed for unemployment benefits during the week of March 21st as coronavirus-induced layoffs surged around the US. Even when the short-term effects end, the long-term economic impact will ripple for years.
More than 99% of all businesses are small businesses, and they employ about half the US workforce. Most small businesses lack the cash reserves to weather a month-long interruption, and forecasts indicate more than 2 million workers could lose their jobs in just one week as a result of the coronavirus pandemic. According to the Business Insider, there’s also the possibility of a “startup depression”, wherein new companies don’t enter the job market because of the pandemic.
Which industries are most impacted by the Coronavirus?
Hospitality and travel are two of the biggest industries impacted by COVID-19 thanks to travel cancellations, restaurant and bar closures, and low consumer confidence. Manufacturing and construction have largely held off on layoff decisions, but these industries could suffer the strain as consumer demand drops.
Jobs in retail, accommodation, and food service have the highest risk of short-term impacts from the pandemic. Across the job board, low-income workers and those who have low educational attainment, as well as small businesses, have the highest risk of the short-term effects of the pandemic.
Jobs in agriculture, management, finance and insurance, scientific or technical industries are the least at risk to short-term impacts from the coronavirus. Low-vulnerability occupations include jobs that could be done at home, have limited physical contact with others, or are considered essential.
What are the known lasting effects coronavirus will have on the economy?
A global, novel virus that keeps us contained in our homes for months is reorienting our relationship to government, to the outside world, even to each other. Some changes these experts expect to see in the coming months or years might feel unfamiliar or unsettling: Will nations stay closed? Will touch become taboo? What will become of restaurants?
But crisis moments also present an opportunity: more sophisticated and flexible use of technology, less polarization, and a revived appreciation for the outdoors and life’s other simple pleasures. No one knows exactly what will come.
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