Coronavirus Affecting Production
January 23 marks the first COVID-19 case in the U.S. with no one worried at all, according to the CDC. Two months later the U.S. reached 44,000 cases along with people horrified, searching for the last bottle of hand sanitizer on the empty shelves in every store. April 1st marked the 200,000 points with everyone home waiting for this to go away, along with absolutely no one buying anything whatsoever. Why is that? One would think that because people are home they would be shopping online. Nope. Not with businesses closed and more people signing up for unemployment than ever before. This sum of business closed meaning no production is happening of services and goods is called GDP (Gross Domestic Product). GDP is basically the make or break decision on the economy. GDP is the monetary measure of the market value of all goods and services produces in a specific time period. If businesses are closed for the health of the costumers and themselves, then nothing is being produced leading to a fall in the economy. We are heading into a global recession, and this won’t have a good impact on people.
Not a Good Time for Investors
According to a Quartz article on Global Economic Disruptions, The NASDAQ had dropped over 2,500 points or 20-25% from February to March of this year. Shareholders in big corporations lose money by the second. For companies like Exxon Mobil (XOM), a large oil and gas company to drop nearly 50% per share, this makes a shareholder lose 50% of their money in this company. Companies like Apple, Nike, and Amazon are also in a financial crisis right now with almost 20% down per share from February. With many people losing money through the stock market and job loss from the Coronavirus, no one is on the market to buy a new phone or pair of shoes, with many families not having a lot of money to even afford the necessities.
Unemployment Means no Extras
A New York Times article found out that the U.S. unemployment rate is now at 3.3 millon from March 15th to 21st, meanwhile, experts say that in the second quarter there could be a potential 30% unemployment rate in the U.S. This is a huge financial matter for both companies and families, which go hand in hand. When companies lay off people for a matter like the coronavirus, then people are unemployed, making them not buy extra purchases like new clothes. Then those companies don’t have enough money to keep people working. This circle will just keep going which makes the economy drop. So what could the government do in order from companies to keep running while unemployed people have enough money for essentials?
As of right now, people can sign up for unemployment insurance or the government will compensate money to those who qualify. For business, the government will support them with the necessary amount of money. The government is planning a near-200 billion-dollar tax cut to those who need the cut. This is obviously needed and helpful. Yet, is this really the best way to handle unemployment? People are getting money for unemployment. Yet they don’t have the job and won’t even after the pandemic is over. This makes workers have to apply for jobs again after. This puts a lot of stress on the unemployed who later will need to apply for jobs. Other countries, for example, Britain is giving 80% of their salary to workers that are not working at the moment. Then after the pandemic is over they will guarantee to get their jobs back. Personally, that is better especially for people stressing over whether they will get their job back. According to a New York Times article, “Jobs Aren’t Being Destroyed This Fast Elsewhere. Why Is That?” Even though Congress passed a 2.2 billion dollar bill to the unemployed, “there is nothing efficient in letting the unemployment rate rise to double digits. Losing one’s job is anxiety-inducing” (Zucman).
Ways Companies are Helping
In times of uncertainty, many companies are helping both employees and consumers. For example, car brands like BMW and Mercedes, will cover the first 3 payments of a lease when buying a new car. According to Forbes magazine companies like Apple and Amazon are giving employees unlimited pay sick leave for the next 3 months. Companies like these will really help in the long run.
Relating Everything Together
The coronavirus pandemic is a health crisis that leads to an economic slowdown. This puts a lot of pressure from every individual to comeback out of this global recession with financial comfort. As I’m also a shareholder in stocks in the stock market, this topic is very important to me. For people who are unemployed, their mindset needs to be that they may not have money for a couple of months for extra luxuries. But the stock market is always gonna come back from this crisis. Take the 2008 stock market crash for example. It may just not take a quick week to recover. These financial concerns are booming everywhere. Whether one is a shareholder, unemployed, self-employed, business owner, or working a job, this could likely affect you. This domino effect is causing major worrying. The economic impact started off with COVID-19 cases booming. Companies started getting worried about them; their employees and customers of getting sick. So they laid off people and shut the business. These people had to sign up for unemployment. Meanwhile, the company’s aren’t producing enough because they have few workers. This causes the GDP of the U.S. to lower making the economy drop. Causing shareholders to lose money. As this is happening, the unemployed are trying to sign up for unemployment insurance. In the end, the companies lose money, the shareholders, and the unemployed. Whatever role you play, just know that this will end eventually.