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IS THE BELOW ARTICLE A GOOD PERSUASIVE ARTICLE……..IS THE CLAIM…
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The Impact of COVID-19 on the US Economy: Why it is was more Severe than some Economists thought.
The COVID-19 pandemic has had a profound impact on the economies and has been exacting pressure on governments since it began in March 2020. The sudden outbreak of the virus and the late measures taken to contain it led to widespread business closures, job losses, and a sharp decline in economic activity worldwide. Countries around the world had to ask small businesses to close to stop the spread of the virus (Amadeo, 2021). The pandemic has affected nearly every sector of the economy.There is an ongoing debate among economists that affluent countries were not much affected as developing countries because of the pandemic. Economists need to understand how the extent and severity of the impact varied greatly between developed and developing countries.
I claim that the United States of America, which has the largest economy in the world, has been adversely affected, as compared to developing countries, economists were not been able to notice this and argue that it is less effected than other countries. This is because, at the time, everyone was too preoccupied with determining who was to blame for the virus rather than concentrating on the issues that were currently occurring. I will provide reasons for my argument by using specific effects of the pandemic on GDP, Inflation, employment.Housing and housing as well as its impact on the US economy in the coming years. This article argues that COVID has had detrimental effects on the world, and the economy of the United States was not an exception. While we are still learning to continue to grapple with the ongoing effects of the pandemic, it is important to understand how it has affected the economy as compared to other developing countries.
Terms
“Developed countries” and “developing countries” are the two terms used in the world categorize countries based on their level of economic development .A developed economy is typically a country with a relatively high level of economic growth whereas a “developing economy” do not have the same level of economic development (Majaski, 2019).
GDP
Gross domestic product (GDP) plays a pivotal role in a country’s prosperous future. There is often a misconception, even among economists, that the bigger the size, the smaller the effect but it is the opposite. Economists who argued that because the US has a larger GDP than underdeveloped nations, it will be less affected by COVID’s impacts. But they were mistaken because the repercussions were considerably more severe than anybody had anticipated. As the US GDP is large, it needs more stability, even a small change will have a bigger impact on it as compared to the same change experienced by a developing economy (L. Zeager, personal communication, January 24th, 2023). The US GDP suffered a major setback, due to a number of factors, including widespread business closures and reduced consumer spending. According to the Bureau of Economic Analysis, the US economy shrank by 3.5% in the first quarter of 2020, marking the worst economic performance for the US since 1946 (Mutikani, 2021). Whereas for the fiscal year 2020, the economy contracted a record 31.2% (Amadeo, 2021). The percentage seem small as compared to a developing country. But to put it into perspective, consider that the size of the US GDP is 27.5 trillion, 31.2 % contraction means that 8.5 trillion dollars were lost. Now this is an exceptionally larger number, when compared with the GDPs of three largest developing countries. To say that the US economy is not mature compared to other developing economies would be incorrect, as it has shown signs of recovery, but the pandemic’s impact on the GDP is expected to last longer than previously expected. According to the Congressional Budget Office, “The US economy will not return to its pre-pandemic level until 2025(Congressional Budget Office, 2021)”. This information is important for the economists who argued that the pandemic would have little impact on the US economy.
Inflation
The impact of COVID-19 was not only felt by world economies but also by the consumption baskets of citizens of all countries under debate. Economists say that low, stable, and, most importantly, predictable inflation is good for an economy (Inflation: Prices on the Rise, n.d.). This is because low inflation can be captured in its initial stages and necessary action can be taken. The inflation that occurred during the pandemic was unexpected and caused significant losses. As the CPI describes the change in prices of a basket of goods over time, during the pandemic, the change experienced by households in the US was significantly greater compared to many other developing countries. When the Consumer Price Index (CPI) increases, it has an impact on the cost of living because it leads to an increase in the cost of goods and services. Consequently, households have to spend more money to sustain their standard of living. The CPI in the US increased by 6.5% between the fiscal years of 2020 and 2021, which is the highest the US has ever seen (Hausman, 2021). This may seem like a small change, but the increase in prices had a substantial impact on households, particularly those relying on hourly wages. As fuel and food prices increased, households with only one earner experienced a considerable financial strain, which disrupted the well-being of the household. Comparing it to a country such as India, which is a developing nation with a large number of mouths to feed, the CPI rose by only 5.2% according to Press Information Bureau during the pandemic (Press Information Bureau,2022). An important factor to consider is that the increase in CPI during the pandemic led to a rise in food insecurity in the US, which was not anticipated at the beginning of the pandemic. According to one report, food insecurity doubled in the US and reached 32% during the pandemic (Bauer et al., 2020). The COVID pandemic had a significant impact on the CPI in the US, resulting in higher prices for goods and services, and a decrease in the purchasing power of households. While the signs were there, many economists didn’t look at them, but some did, such as Diane Whitmore Sterzenbach, who at the time was the director of the Institute for Policy Research at Northwestern and talked about the pending crises, but as many economists didn’t focus on it at the time, they just neglected it. This shows that assuming that the US is financially secure and downplaying the impact of the pandemic resulted in underestimating the severity of inflation, which was higher in the US than in some developing countries.
Housing
Another sector that was unnoticed by many economists was the house payments that people make in the US. As the system in the US for owning a house is based on mortgage loans, where families and individuals make monthly payments for their house or apartment, there are only a few people who are the owners of their homes and make no payments. During the pandemic, and more precisely during the times of lockdown, many households with low incomes as well as residents of densely populated urban areas missed their rent payments for multiple months (Bauer et al., 2020). This is not the case for developing countries. There are no mortgage payments in developing countries because most of the people own their own houses or are tenants and have made payments in advance for months (L. Zeager, personal communication, January 24th, 2023). This is also an indicator that shows that the US was more impacted than the developing countries, in the sense that citizens were not sure about having a place to live as they were not sure of their employment.
`UNEMPLOYMENT
As we know that, unemployment is the lack of jobs to individuals who are above 16 years and are actively seeking for work and can be able to accept work if offered this also included individuals who have been laid off either temporarily or permanently. This is another major impact of the pandemic on the US economy that has been unnoticed Is its effect on unemployment rate in the US. The pandemic led to widespread job losses across the states, particularly in industries such as hospitality, tourism, and retail. Unemployment rate has since fallen, but it remains elevated compared to pre-pandemic levels, with the Bureau of Labor Statistics reporting the unemployment rate to be 4.2% unemployment rate in January 2022, down from a peak of 14.8% in April 2020 (Daniel, 2022). The impact on employment has been particularly devastating for those in low-income jobs, and for younger workers who are just entering the job market there have more job losses than job creation due to the pandemic. The pandemic also had a significant impact on the labor market, with millions of Americans losing their jobs and the unemployment rate spiking to a record high of 14.8% in April 2020 (BEA, 2021).
Long term effects.
Lastly, the epidemic is almost over, and we are in a far better position than we were when it first began. (Kimball, 2023). We must consider that the economic setbacks that were observed during the pandemic will run their course and have far-reaching consequences, including increased income inequality, chances of recession, reduced access to healthcare, a rise in mental health issues among the population, increased debt, inflation, and lower productivity, as well as changes in consumer behavior and the way businesses in the US operate. Not long ago, recession used to hit the US once in a blue moon. Nevertheless, the probability of a recession in 2024 is increasing (The Economist, 2022). A recession can not only cause a loss to an economy but also, on a personal level, it can have negative impacts on physical and mental health. Another potential long-term effect of the pandemic on the US economy is the increase in debt levels. The US government had to spend a large sum of money on relief measures, such as unemployment benefits, as well as business loans and grants. This caused an increase in the national debt, which had already reached its limit before the pandemic. According to a report by the CBO, the federal debt reached 102% of GDP by the end of fiscal year 2021, the highest level since World War II, and it will continue to rise for some years ahead (Congressional Budget Office, 2021). It is important to consider the implications of increasing debt, such as higher interest rates and reduced investment in critical areas like infrastructure and education. Therefore, it is important for economists to come to a consensus and have discussions regarding the long-term implications of the pandemic before it is too late.
Conclusion:
In conclusion, the COVID-19 pandemic has had a greater impact on the US economy than on many developing economies. This is due to a number of factors, including the severity of the outbreak in the US, and the action of the economists who were in the government at that time. While the pandemic has affected every country, it is clear that the US has been hit particularly hard, and it will take a combined effort to rebuild the economy and ensure that all Americans can recover from this crisis.Overall, the take away can be that the pandemic has created a complex and challenging economic landscape and the dispute over whether developed or developing countries were more severely affected continues, however this article makes important considerations to demonstrate that the developed countries were harmed more.
