SERIES ~ PANDEMIC LESSONS LEARNED – PART FOUR: THE ECONOMIC IMPACT OF COVID

COVID Economy-pexels-photo-7646224

“The dramatic plunge in positive assessments of the national economy as a result of the coronavirus outbreak is steeper than declines in economic ratings seen during the last two recessions.” ~ Pew Research Center, April 21, 2020

“Letting the virus spread to your parents and grandparents to protect your 401k is not pro-life.”~ Representative Liz Cheney

“The economic impact has been this extremely uneven thing where…many hundreds of thousands or millions of small businesses have been hurt in a terrible way, but most of the big companies have overwhelmingly done fine.” ~ Warren Buffett

“We need to show that we have a government that understands the scale of this problem and understands that the approach to it is to get money … into the hands of the people who will put it down at the grassroots level and help support this economy from the ground up.” ~ Senator Elizabeth Warren

As 2020 dawned, most of us were leading our normal lives. We were watching Harry and Meghan “step back” from the royals, wondering if Harvey Weinstein would be found guilty of felony sex crimes, learning the latest about President Trump’s (first) impeachment and bracing against his latest bombastic tweets.–  the usual stuff.

The U.S. economy was enjoying 10 years of “the longest period of economic growth and job creation in American history,” which was triggered by President Obama’s signature American Recovery and Reinvestment Act of 2009  (Forbes, Jan. 21, 2020).  But what we learned, once again, is that there are many factors that affect and impact our economy and they are all connected; a perfect storm of these factors can create a crisis that will topple our economic pillars like dominos.

Historic Pandemics and Epidemics 

Before getting into how our economy ran into the COVID-19 wall, however, let’s take a look back at three of the world’s mega epidemics and pandemics, and how they upended the economies of those times:

  • The Bubonic Plague (AKA The Black Death) – 1348-1351 (but lingered longer): The Plague, which originated in Asia and spread to Europe by humans (not by rats, as previously thought) on merchant ships, decimated populations. The economic impact was catastrophic, laying waste to farming due to the sweeping deaths of field laborers which, in turn, caused the financial ruin of landowners.
  • Smallpox Epidemic Among New World Indigenous People – 1492 and on: More than guns wiped out the Incas, Aztecs and other natives of what came to be known as South, Central and North America. The Europeans brought smallpox and other diseases to which they had built immunity over time, but to which the native people of the New World were susceptible. As a result, millions of natives died, leaving their lands, homes and lifestyles of the survivors in ruins and negatively impacted the economics of Native Americans for centuries.
  • Influenza (AKA) Pandemic – 1918: We have heard a lot about this one, also (mistakenly) referred to as the Spanish Flu, during our current pandemic. A hundred years ago, when here were no vaccines, the pandemic was battled with NPI — non-pharmaceutical interventions — much like we have done with COVID-19: they practiced social distancing, fewer business hours; closures of schools, churches and theatres and restrictions on public gatherings. And according to a study by the World Economic Forum, the economic impact on areas that practiced NPI was far less than on areas that did not practice NPI, similar to our current statistics.

Our current economic situation was also triggered by the escalating infections and deaths due to COVID-19, a situation experienced worldwide. To date in the U.S., nearly 80 million people have been infected and nearly one million have died. And each illness and death in some way impacted other people — family members, coworkers, employers, customers, friends, neighbors, teachers, law enforcement personnel, and more — as well as our federal, state and local governments, businesses and government  institutions — until it seemed that everyone and everything had been turned upside-down.

Those Empty Shelves 

The first signs that something was amiss was empty supermarket shelves, as panicked customers who suddenly found themselves working from home and their children schooling from home cleared them primarily of disinfectant wipes and toilet paper. Brand name products and store brands vanished. The grocery supply chain that was used to shipping a certain amount of product to stores could not keep up with the skyrocketing demand.

Stores were caught off-guard and unable to accurately forecast the amount of product they needed to keep up with the demand. Some stores started limiting purchases per customer, a valiant but feeble gesture which did little to solve the main lack-of-supply problem.

As a result, millions of consumers turned to online ordering. Amazon, in particular, benefitted as it raked in additional billions in profit, but also added hundreds of thousands of employees. Walmart also raked in millions in additional profit as it also added hundreds of thousands of workers. Both companies helped to meet the online demand for consumer goods and provide jobs. And many of those employees and other essential workers — both in healthcare and other fields (more than most of us could image) — went above and beyond to help their companies and their country, especially during that hellish first year.

Heading Home To Work And Job Hunt

To compound the growing and sweeping economic woes, many offices closed and employees relocated to their homes to work remotely. Others lost their jobs across all sectors and began job searches while sheltering at home. Those Job losses hit women and people of color especially hard, not only because their numbers were very high in some of the hardest-hit industries, especially those in which people came into close contact: the leisure and entertainment, food service and retail industries, but because women and people of color were already in compromising economic positions and the pandemic worsened them.

The Economic Dominos Kept Toppling…

  • Hospitals, academic medical centers, nursing homes and the like were overwhelmed with COVID-19 patients, impacting them economically, draining them of funds that were needed to purchase additional equipment and supplies. As a result, elective surgeries were canceled, depriving medical facilities of income. As well, some non-COVID patients with urgent issues could not get treatment in time to save their lives or had to wait for treatment in pain and risks to their lives and health. Many patients did not seek preventive care or had their appointments canceled by their providers; others suffered or died from other diseases, such as heart ailments and cancer, because their treatments were delayed. These tragedies, while heartbreaking and infuriating on a human level, also produced a financial impact. A related economic issue involved millions of Americans who avoided seeing a doctor when they had COVID-19 symptoms due to the cost of the visit and treatment.
  • Air travel was restricted, affecting pilots, flight attendants and other airline personnel, followed by travel bans and restrictions, and the cruise industry being sidelined.
  • Federal and state governments issued stay-at-home instructions for all citizens, keeping millions of customers out of supermarkets and retail stores, and shifting their buying habits. Consumers shifted to online shopping and curbside pickup at local stores. Those who could afford to do so tipped more heavily than usual and became more determined than ever to support local shops to help ensure that they stayed in business.
  • Small businesses were especially hard hit, with many having to close their doors, causing owners to enter bankruptcy and lay off their employees. Some small businesses, like the iconic coffee carts parked on the curbs outside office buildings struggled at office workers disappeared from their offices. Restaurants were especially impacted, with many closing permanently. There were a few bright spots: Some food trucks were able to go digital and actually grow their businesses, like some supermarkets and restaurants that offered delivery and curbside pickup services. Likewise, cleaning services that once served office buildings found ways to grow their businesses in light of increased demand for deep cleaning of buildings.
  • Major retailers declared Chapter 11 bankruptcy; Neiman-Marcus, Brooks Brothers, Stein Mart, J.C. Penney, Belk and others that had already been suffering from changes in consumer habits finally caved in the wake the pandemic.
  • The Trump Administration stalled economic recovery and growth by failing to make hard choices and encourage masking and other best practices to slow the spread of the virus. While the stock market soared and made the rich richer, many lower-income Americans struggled financially.
  • The complex international supply chain stalled. That pipeline, which is composed of many interconnected components, can be damaged or broken if one or more of those components fails. The “pandemic caused [a] perfect storm for [the] supply chain crisis,” according to an article in The Guardian. Due to global trade, the U.S. and other countries are dependent on goods from many nations. Factories shut down — especially in China and  Vietnam — and transportation slowed due to the decrease in people available to produce and transport goods.
  • Variants emerged, with Delta and Omicron causing the most concern, confusion and setbacks.
  • Ports were clogged with container ships. With the pandemic easing in 2021, consumer demand escalated and ships containing apparel, furniture, car parts, etc., steamed into ports in record numbers. In Los Angeles, in particular, these ships became jammed, in part due to a lack of workers to, among other tasks, unload containers and remove the empty ones to make way for new ones. This situation is expected to last well into 2022. And, remember, everything is connected: one reason some consumers cannot find their pets’ preferred canned food or beer lovers cannot find their preferred brands is due to a shortage in aluminum because of factory shutdowns. All of this affects economic recovery, and has contributed to inflation.
  • Inflation reared its ugly head due to all of the above, but it’s especially high due to the recent positive news about the pandemic and resulting spike in robust purchasing by consumers who were holding on to their money because of so much uncertainty during the pandemic. As we know, when consumer demand massively outweighs supply, inflation can occur.
  • Gas prices began to rise as the pandemic appeared to recede, and people started to go places in their cars again. During the height of the pandemic, the demand for oil and gas was much lower and so were prices at the pump; now that demand has dramatically risen, so have prices. Gas prices tend to rise and fall to a degree in normal times, depending on where you live and what the current demand is. The pandemic prompted dramatic changes in consumer usage, and, thus, dramatic drops and spikes in prices.

Help Arrived On Several Fronts

It became clear that the only way that the economy could recover and Americans could resume their “normal” lives was to defeat the virus. And while efforts were underway to develop treatments and vaccines, more immediate economic relief for millions of Americans was delivered on three occasions, through direct economic impact payments to those who met the criteria. But more help was on the horizon.

  • On March 5, 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, which included emergency funding for hospitals and other medical facilities that were crushed under the burden of caring for the overwhelming number of COVID-19 and other patients; extended unemployment benefits — including payments to gig workers. The Act also included  the first round of direct economic impact payments to financially strapped Americans.
  • On March 6, 2020, Congress enacted the Coronavirus Preparedness and Response Supplemental Appropriations Act that provided funding for numerous emergency items, including vaccine and therapeutics development and aid to medical facilities for supplies; as well as aid to small businesses impacted, U.S. embassies for evacuation and preparedness, and to other countries that were affected by the virus. (Note: this Act was sponsored by the renowned and wonderful Congresswoman Nita Lowey, who was my U.S. House Representative for many years.)
  • In late December 2020, the COVID-related Tax Relief Act authorized the second round of direct economic impact payments of up to $600 for qualifying individuals.
  • On March 22, 2021, Congress passed the American Rescue Plan, which provided not only for the third round of direct economic impact payments to individuals, but also funded the vaccination program, a child tax credit, extended unemployment compensation, small business assistance and much more.
  • In 2020, we learned that remdesivir and monoclonal antibody treatments work well to treat COVID-19, and that hydroxychloroquine does not. We learned about many more treatments as the pandemic continued, and updates are issued as new testing and data emerges.
  • The CDC quickly developed a COVID-19 test to send to testing facilities nationwide. But delays in actual testing resulted in a crucial setback in the fight against the virus. Testing finally did ramp up only to run into a brick wall again with a lack of tests available smack in the middle of the recent holiday season and Omicron outbreak. Now we’re in better shape with the federal government sending free test kits to all Americans regardless of whether you have health insurance or your immigration status. Your insurance might cover tests at a facility, such as a prompt care walk-in site or pharmacy, but you need to check with your insurance company on that.
  • The U.S. government (NIH/NIAID) and Moderna joined forces to develop a vaccine. Independently, Pfizer worked on a similar vaccine. Later, Johnson & Johnson produced a third vaccine. Other pharma and biotech companies joined in, and in record time the U.S. and the world had viable vaccines to combat COVID-19. In the U.S., vaccinations and boosters are free to the public.
  • Telehealth / telemedicine visits were expanded, making it easy to access healthcare while sheltering, isolating and quarantining. The hope is both will continue post-pandemic.
  • To help with high gas prices, the Biden Administration announced last November that it will release 50 million gallons of oil from the Strategic Petroleum Reserve.

A Few Additional Notes

Over the past two-plus years, Americans got smarter. We learned about spike proteins and the genius of RNA technology! We were enlightened about the FDA’s emergency use authorization (EUA) for testing, therapeutics and vaccines.

And we learned that battling a killer pandemic takes strong and intelligent leadership in both the public and private sectors, and that weak leadership can delay resolutions and increase the costs in lives and dollars; this is not to be confused with cautious leadership.

Most of all, we learned that more than money — not to downplay its significance in our capitalistic republic — what is most important is the safety of our loved ones. So many Americans and our fellow world citizens lost someone they love or know. We can usually recover from losing money; it’s much more painful to recover from losing someone close. 

But now, as the pandemic seems to be winding down and the U.S. economy is recovering, albeit with the challenge of inflation, we find ourselves in the midst of another crisis. When Putin initiated his monstrous invasion of Ukraine, it put the U.S. and NATO in the position of protecting NATO countries and engaging in an economic war and possibly a cyber war with Russia to avoid a “hot ” war (i.e., WWIII). This strategy includes a U.S. oil embargo, which is likely to push energy prices, including at the pump, higher. Some in Congress have suggested a gas tax holiday, but others say that would not save individual drivers very much but would take billions away from the Infrastructure Bill. Again, everything is connected, so we’ll see. For now, to help drivers help themselves, Consumer Reports offers some tips; and to its list I would add: carpool, return to grocery deliveries (if the fees are less than your gas to and from the store) and cut down on the number of shopping trips and errands. We’ve been through high-gas-price periods in peacetime; we can deal with it during wartime. Because while gas might be pricey,  democracy is priceless.  

Thank you, valued readers, for following my Pandemic Lessons Learned series, and I hope you’ll join me as I continue it with Part Five; The Worldwide Worker Walkout. Meanwhile, all the best to you and your pocketbooks as we continue to deal with the virus and face our country’s latest challenge.

Until next time,

Jeanne

If you missed any previous posts in this series, you may read them here:
Part Three: Working / Schooling From Home
Part Two: The Lifesaving Brilliance Of WWW-IQ
Part One: Vaccines, Testing and Treatments  

 

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