Gripped in the clutches of perilous coronavirus, the world is struggling to normalise its daily activities. Lockdowns, quarantines, and social distancing have brought the situation under control to some extent but have led to a huge decrease in demand. When the businesses are shut down, manufacturing is stopped, workers are losing jobs and people are abstaining themselves from moving out, the situation of recession doesn’t seem to be a far-fetched phenomenon.
With the total number of coronavirus cases crossing 120,000 in the United States surpassing China, more than 3.3 million people filed for unemployment which is the highest number ever recorded in the history of the U.S. Department of Labour. As businesses were shuttered and employees were asked to stay home to lessen the spread of the pandemic, fear of losing jobs is enthralling the workers.
William Dickens, professor of Economics and Social Policy at the Northeastern University provides an analysis of the impact of COVID-19 on the current economic situation of the U.S. The unprecedented and steep increase in unemployment insurance claims is causing a recession which is not normal. In a typical recession, the government makes and spends money in a wake to stimulate the economy so that people go back to their normal routines. However, this wouldn’t happen this time as it would lead to a rapid increase in the number of infected cases. Instead, the country will choose to remain shut down. After the situation gets normal, either the economy will boost up rapidly due to the irresistible behaviour of Americans to jump into their normal workings as soon as possible, or there would be a bankruptcy cascade.
Announcing stimulus bills to provide jobless benefits, direct payments to taxpayers, increasing unemployment benefits, and allocation of funds to buoy distressed businesses are the best possible steps that can avoid future trouble. So, what we can do best is to stay home and avoid the situation from ruining further.
Kriti Vishwakarma