An Economy Crippled by Coronavirus

Courtesy+of+World+Economic+Forum

Courtesy of World Economic Forum

Claire McMahon, Scarlet Staff

Along with the devastation and peculiarity that accompany the Covid-19 pandemic, the world finds itself in the midst of a recession that threatens to rival the most serious economic collapses of the last century.

Since recovering from the Great Recession of 2007-09, the global economy has experienced a general upward trend. In February of this year, an unanticipated change occurred.

In response to the rapid spread of the novel coronavirus, the country went on lockdown in an effort to slow the spread of the virus and flatten the curve of infection. Last month, governors started mandating that everyone except for essential workers stay at home. At least 42 states now have such orders in place.

Based on these orders and Center for Disease Control (CDC) recommendations, in addition to people’s fear of contracting the virus, the current national ethic dictates that one should stay at home unless it is absolutely essential to leave.

With almost all public facilities closed for the foreseeable future, revenue has taken a major hit. Economists agree that a recession has begun but cannot yet predict how serious it will be.

In a report published on April 14, the International Monetary Fund (IMF) predicted that the world economy will contract by three percent this year. This would be the steepest downturn since the Great Depression.

“This is a downgrade of 6.3 percentage points from January 2020, a major revision over a very short period,” said the IMF. “This makes the Great Lockdown the worst recession since the Great Depression, and far worse than the Global Financial Crisis.”

The national unemployment rate rose to 4.4 percent in March, according to the Department of Labor. The Department also reported on Thursday that there have been 22 million unemployment claims in the last four weeks, indicating a more severe strain on the workforce than at any other time in recent history.

Some strategies are already in place to help combat the crisis. But as of now, there is no comprehensive plant to restore the economy.

This month, the federal government sent stimulus checks to almost all Americans. This strategy has the dual purpose of providing people with essential aid and attempting to boost the economy.

Policymakers and others are now asking themselves how they will know when the nation is ready to begin transitioning back to normal life and what that transition will look like.

According to Suzanne Clark, president of the US Chamber of Commerce, reopening public life and getting the economy back on its feet will be a gradual process. “You can’t just turn the light switch on and have everyone go back to work, as much as businesses would love to do that,” she said.

There is concern among health experts and politicians that a second wave of the virus will emerge if people go back to work as soon as the number of people infected begins to decline. But there is also concern about the damage that could result from not acting soon.

When it eventually becomes clear that the number of cases is decreasing and lawmakers decide that it is time to ease restrictions, they will face the challenging task of doing so in a gradual way that does not lead to a resurgence of cases and an reversal of the progress that has been made.

The decision to reopen the country will also depend on the number of testing kits that are available. Since the crisis began, there has been a severe shortage of this critical resource.

Local and federal officials have not yet decided how they will strike a balance between restarting the economy and continuing to protect the public.

In a new poll published by The Wall Street Journal and NBC News, 58 percent of participants said that they are more concerned that the government will ease restrictions too quickly than they are that the government will wait too long to lift regulations.

There is no doubt that the economic impact of the virus will outlive the virus itself, even after daily life seemingly goes back to normal.