COVID-19’s Economic Impact
It is truly a troubling time in the United States and across the globe for all of mankind. I underestimated the impact this Corona virus was going to have on politics, culture, everyday life, and specifically the economy. In the past several weeks our economy has begun to crash. It is due to the U.S government and others around the world restricting international travel, discouraging domestic travel, and discouraging social gatherings. These three things have had a massive impact on production and consumption going on in our country and abroad. Besides trade, that is all an economy is made of, the production and consumption of goods and services. I do think it is right regarding the safety and well being of the American public, for the government to make these moves; I’m just simply highlighting how much of an impact this is having and will continue to have on the financial security of all Americans.
We are seeing the effects today, Wednesday March 18 around 2 pm, as the Dow has dropped over 2100 points (-10%), the S&P 500 has dropped over 220 points (-9%), and the Nasdaq has dropped over 600 points (-8%). These single day drops are devastating to people’s savings, 401k’s, and other investment portfolios. For those who are nearing retirement or are considering retiring this year are having to put that on the back burner because their life savings are getting depleted by the day. Not to mention that all these Indexes have been seeing these similar single day drops for weeks now.
The U.S government is doing the best they can to prevent panic and a complete crash of the economy. Lowering interest rates to nearly 0, proposing stimulus packages, and delaying Federal income tax payments for all Americans. The Federal Reserve lowers interest rates an entire percentage to nearly 0%, in an attempt to make it easier for Americans to get loans in this time of desperation. Also, it encourages Americans to invest rather than put their money into savings accounts to attempt to counteract the stock markets plunge. President Trump has said in press conferences that they are considering and working on proposals for two, 500 Billion dollar, stimulus packages that would be sent out directly to all Americans. This is in reaction to millions of Americans who are being told they can’t come into work, but they live paycheck to paycheck to provide for their families. The stimulus packages are being supported by both parties and are expected to be approved, as the president has said he wants this to happen as soon as possible. Another thing President Trump proposed, that the federal government passed, was the delay in paying federal income taxes to keep more money in the hands of American citizens in desperate times. Trump clarified that you must still file your federal income taxes by the normal April 15th date, but payment would not be expected until a later date.
Reading this can really make you feel like you need to panic, and that is not my intention. My intention is to spread awareness of the other impacts COVID-19 is having besides affecting the health of all who are infected. These impacts are as severe as any economic hardships most Americans have ever faced. In this time of struggle, now more than ever, it will take a collective global effort to keep the intertwined international economy from crashing. I fear things will get worse before they get better, but I am optimistic the human race will beat this virus and all the negative impacts that are coming with it.