Ever since the COVID-19 pandemic hit in January of 2020, economies worldwide have suffered, and many were worried about the recovery time. However, about two years after we all entered quarantine for the first time, economists claim that the US economy is on its way to recovery. According to CNN Business, both the California and United States economies are currently 89% back to where they were in February of 2020.
Looking more closely at this data, we can analyze the rate at which people filed for unemployment. In April of 2020, the US peaked unemployment with just about 23 million Americans filing for unemployment benefits for at least two weeks in a row. While this statistic is extremely high, I am not surprised, given the impact that COVID had on our everyday lives at that point, ultimately affecting the job market. The Bureau of Labor Statistics claims that at this time, the US hit an unemployment rate of 14.7%, a pandemic-era high. We can also compare this statistic to the highest unemployment rate during the Great Recession: 10%. Because the COVID unemployment rate is significantly higher than that of the Great Recession, one of the United States’ worse economic declines in history, the impact COVID had on the overall economy is evident. However, the Bureau of Labor Statistics claims that the current US unemployment rate is 4%, significantly lower than the unemployment rate in May of 2020. Furthermore, in February of 2020, the US unemployment was 3.5%, indicating that the economy is slowly getting back to what it once was. Finally, as of December of 2021, overall job postings have increased by 129.4% compared to February 2020. In the healthcare industry, in particular, job postings have increased by 173.42%. This increase makes sense because of the increased demand of healthcare workers in light of COVID. Overall, this improvement in the overall job market indicates an improvement in the US economy. However, unemployment is only one factor of our economy’s overall status because inflation is still high, and many small businesses, such as restaurants, are still recovering from COVID.
How does the US economy compare to the economies of other countries? Well, in the third quarter of 2021, the US exceeded its pre-COVID GDP level while other countries, such as Japan and some large countries in Europe, followed closely behind. GDP is known as Gross Domestic Product, and the better a country’s GDP, the better its economy typically is. According to Booker, the US has a strong GDP compared to the rest of the world because many countries in Europe entered another lockdown while the US was extremely aggressive about distributing vaccinations.
In class, we learned about economic security: the protection against economic risks such as work injuries, unemployment, inflation, business failures, and poverty. Although the economy is recovering now, the COVID-19 pandemic has proved how weak our economic security is. I think that there should be changes made to the system to prevent the high levels of unemployment and economic instability that COVID caused.
Questions:
How do you think the future of COVID will affect the economy?
What could be put in place to prevent a weak economy in the future in the case that there is another COVID surge?
How do you think COVID affected the “broad goals of an economic system”?
3 comments:
As you mentioned in the article it seems like the economy is recovering pretty well compared to the height of the pandemic. I don't see the pandemic getting worse or being rekindled (hopefully) by another outbreak. As for right now I think the economy will continue to slowly recover. However, I'm not sure if it will go back to normal anytime soon considering the fact that the many business and jobs lost can't be simply given back. Therefore, I think for now the economy will continue to rebuild but definitely pretty slowly.
I think it's funny that you mentioned COVID-19 exposing the weakness of our economic security because I wrote the exact same thing on the "Broad Goals" assignment. As of right now I don't think the U.S. is in a stable enough place to put any infrastructure in place. Maybe once the economy is considered "full-functional" it would be a good idea to set up a New Deal-esque (obviously minus the racial discrimination part) kind of program that would provide guaranteed work in case people potentially lose their jobs.
As I mentioned before I think that the pandemic shifted the priorities to economic security followed closely by economic growth. I'm sure for many who were more impacted by the pandemic it could've completely rearranged which factors they considered most important and placed security as their top choice. I think that the theme of growth and efficiency will remain among the most important even after the pandemic.
I think economists have learned a lot from the pandemic and I hope we all carry these lessons with us in the future. One thing that I think will continue is the rise of working at home, which, according to UGA Today, has increased productivity. Increased productivity would have a positive impact on our economy, hopefully increasing economic growth and efficiency. I think we also learned that we need to have more safety and security measures in place for the restaurant, travel, live entertainment, and hospitality industries because they were hit the hardest by the pandemic. Ensuring that we have plans and policies in place to help these industries can help increase economic security for everyone, not just people who can easily transition to a virtual workspace. University of Georgia economics professor Ian Schmutte brought up an interesting suggestion: governments should utilize “automatic stabilizers that would trigger expanded unemployment insurance benefits when unemployment rates exceed some set level.” Perhaps policies like these would help improve economic security and also lessen the political debate about when the government should step in to help unemployment with more benefits and checks. Overall, the pandemic definitely took its toll on the U.S. economy and I’m hoping that we can learn from the difficult time we went through and figure out how to better prepare ourselves for possible future struggles.
UGA Today article: https://news.uga.edu/economic-lessons-learned-from-covid-pandemic/
I agree with Edan in that I think the economy should only improve from here on out (with respect to Covid). Also, Edan is right that some jobs and businesses will not "recover." Many small businesses shut down permanently due to severe Covid restrictions. At this point, most businesses that want to or need to be in person are in person, and any companies that like the virtual environment will continue to do so - it can be more productive, better for the environment, and fairer to people who live far from work. It is simply the best thing to have come out of the pandemic.
I don't think there will be another severe Covid surge, but hypothetically, how do we prevent an economic depression from natural disasters in the future? We don't. That is a natural occurrence that should happen if the market is generally left alone. Honestly, nobody could predict every possible scenario that could plague the economy (Covid pandemic, Ebola outbreak, the "big" earthquake, acid rain, giant meteor strike, godzilla, the aliens from Independence Day, the aliens from "Alien," spontaneous earth combustion). Also, trying to create a policy to manage any type of unemployment spike would be way too broad - the best solution is to respond efficiently and carefully by customizing policy to the issue at hand. With Covid, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act, coincidentally) provided financial support to the unemployed (Brookings). It is not about predicting the future, but being quick to respond to new circumstances.
https://www.brookings.edu/research/11-facts-on-the-economic-recovery-from-the-covid-19-pandemic/
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