By: David Bai (Correspondent)
The Coronavirus pandemic has affected every way of American life, and the economy has been one of the hardest hit sectors.
From massive unemployment rates to bankruptcies, it is evident that we are entering a new era of American economics. Federal Reserve chairman Jerome Powell says the US economy faces “great uncertainty.”
SHS freshman Michael Wang says that although some sectors of the economy will remain relatively unaffected, some sectors would have taken a massive step back. “The hospitality industry may be hardest hit. This would include airlines, hotels, and restaurants. Industries that have razor thin margins and little cash on hand.”
Wang added that since these businesses would still have expenses despite not bringing in revenue, many companies may go bankrupt depending on how long until the economy is reopened. “Bankruptcies would mean that people may not have jobs to work even when quarantine ends. This could affect the jobs market in a negative way in the long run. Unemployment numbers may take years to return to normal.”
Wang also says there are ‘winners’ from the Coronavirus. “E-commerce benefited a lot from the lockdowns. Even though people had less money to spend, more people trusted services like Amazon to buy goods. The stock price of Amazon has increased a lot in the past few months.”
Wenyan Zhao, a financial advisor, says that the coronavirus reveals problems with the American economy. “We are over leveraged as a society. Many people do not save money and live from paycheck to paycheck. If people saved money, and didn’t apply for so many loans, our economy would be better off. This situation is similar to the 2009 recession, where people took out too many loans and overleveraged themselves. The unemployment numbers are similar to 2009. People simply do not save enough money for situations like this.”
“The economy may not recover for a long time. With many people out of work, people are more reluctant to spend their money. This means bad things for the economy. As we have seen from previous recessions, it takes years just to recover to pre-recession numbers,” Zhao added.
Zhao says that if the coronavirus keeps spreading after quarantine, more quarantines many be necessary. “This would devastate the economy. Many people are already out of money, and more months without an income source would mean chaos. On the other hand, if this epidemic ended in June, life would be back to normal soon. The future of the economy depends on how the virus changes,” he said.
SHS Freshman Andrew Cheung says the stimulus checks from the government were very important but not enough.”People can use that money for basic needs, but it isn’t enough. A family has to pay bills, on top of a mortgage, and buy essential items. 1200 dollars isn’t enough.”
Cheung says that since the checks were insufficient, many people would be forced to work just to survive. “More people working means more infections. Even though the government is trying to help, it isn’t doing enough and may be making the quarantine longer than it has to be.”