What COVID-induced economic volatility means for the U.S.
By Ella Gupta ’23
The COVID-19 pandemic has triggered an unprecedented health and economic crisis. While the stock market has shattered records and the net worth of U.S. households has peaked, economic inequality is worsening and Congress has failed to pass stimulus packages that will help tens of millions of American families stay afloat during the pandemic. Let’s examine both sides of the picture.
Men and women, young and old, black and white – almost nobody has been spared from the negative impacts of the Coronavirus. Practically every day the United States sets new case records, and global cases have surpassed 71 million. In the Triangle, hospitals are close to full capacity and are at danger of being overwhelmed by patients afflicted with COVID-19. The pandemic has also dealt a blow to the American economy. Many small businesses and restaurants will never reopen again. And although they have been negotiating for months, Democrats and Republicans cannot come to a consensus on a stimulus package as Americans struggle with no federal financial support. This lack of aid has had widespread effects, as poverty rates have been increasing since the government’s assistance expired this summer. This lack of financial aid could force consumers to cut back on their spending, and any such significant cutback could weaken the economy.
Furthermore, economic inequality has worsened during the pandemic. Data compiled by research group Opportunity Insights reveals that the highest-paying one third of jobs have almost fully recovered from the recession, while the lowest paying one-third of jobs remain 16% below pre-pandemic levels. Additionally, as of October, while white Americans had recovered more than half of the jobs they lost between February and April, black Americans have only recovered around one third. Black Americans are also disproportionately employed in the service and hospitality sectors, which have felt the brunt of the impact of coronavirus layoffs. As the pandemic gripped the nation in the spring, tens of millions of people lost their jobs, and the U.S. saw record levels of unemployment. Although unemployment has since decreased, job growth has stalled. November only saw a 6.7% unemployment rate, compared to 6.9% in October.
Paradoxically, the net worth of U.S. households was at the highest level ever in the second quarter. Over a roughly seven month period beginning in mid-March (one week after President Trump declared a national emergency), America’s 614 billionaires grew their net worth by a collective $931 billion. After stock prices tumbled in mid-March, the market quickly recovered and has fared well led by Big Tech stocks, even as entire sectors like travel suffer. In fact, the Dow Jones Industrial Average reached record highs in November, breaking 30,000 points. The fact that the market is prospering is likely driven by the fact that it looks to the future. There is hope on the horizon, with Pfizer & BioNTech’s vaccine as well as Moderna’s vaccine beginning to be administered. However, it is expected that the majority of Americans will not be vaccinated until next spring or summer , and it will likely be several months before life returns to “normal.” The pandemic has highlighted the need for systemic change. Looking forward, many Americans are hopeful as president-elect Joe Biden has expressed his desire to combat economic inequality in the United States.
https://www.cbsnews.com/news/wealth-record-high-economy-pandemic-recession/
https://www.cnbc.com/2020/10/23/coronavirus-is-exacerbating-economic-inequality-in-the-us.html