How the Economy Will Recover from Covid-19
The world is at a point where no one is surprised by how much the covid-19 outbreak has affected most aspects of human life. The economy remains to be one of the hardest-hit areas. Subsequent quarantines and lockdowns have been put in place to slow down the spread of the deadly disease, but it has also significantly reduced economic activity.
What was supposedly a promising year of economic growth has abruptly turned into a time of uncertainty and great volatility. The word fear has been used widely when describing how both financial experts and spectators are feeling about today’s market.
But is fear justified or is there some kind of light at the end of this pandemic’s tunnel? A more thorough look into trends in the financial industry is needed to find out.
What the World Knows
As of writing, there are 1.8 million confirmed cases of covid-19 around the world according to the World Health Organization. In the U.S., 560,433 people have been found with the deadly disease. More than 22,000 of those people have died. These numbers are staggering and are a testament to how much the pandemic has been affecting everyone.
According to Forbes, economic recovery rests on the three stages of healthcare responses to the spreading virus.
The first stage is called Protect. It is the current situation of most infected areas. Through mandatory measures, the government is trying to protect more people from getting sick and further spreading the disease. In this stage, there is massive unemployment. The economy is grinding to a halt while shops close down and people stay at home.
What is Yet to Come
The next stage is called Re-open. Although there is still no definite time when safety measures will be weakened, there will come a phase when businesses will be allowed to re-open but social distancing will still be in effect. During this time, there will be an economic rebound. Many people currently have money to spend but are unable to. Once business resumes, they may give a much-needed boost to the economy.
But economic recovery will still not be in full swing. Those who were unemployed during the first stage may not have fully recovered and may limit their spending. People may also be hesitant to actually step out and buy from stores because of concerns they may still get infected. Businesses who had previously planned expansions may also hold out until a more stable economy emerges.
The third stage, Normalize, will start when either a more effective treatment against the disease has been found, or a vaccine against the virus has been created. A drug that significantly reduces the mortality rate of the pandemic will give people the confidence to get back out into the world. If you want to know more about vaccine safety, check out the Dwoskin Family Foundation.
This is the stage where the $2 trillion injection of the US government will help the most. The emergency aid has been divided to low-income earners, unemployed, small businesses, corporations that were hit hard, public healthcare, foreclosures and evictions, student loans, and state aid, according to NBC News. At the very least, it will give people the ability to start spending again once all the fog lifts.
Eventually, businesses and the economy will recover. Although it won’t happen quickly, and it won’t happen completely, the economy will ‘bounce back.’
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Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(email) ken@stltest.net
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