The Economic Impact
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Coronavirus Fallout: The Economic Impact
Uncharted waters. Never-before-seen. Record-breaking. Unprecedented. Cataclysmic. Horrific.
At some point the adjectives run out.
It’s hard to know exactly how to describe the post-coronavirus economic situation, or to know where to start. It’s so big and has so many tentacles. No one really knows the destruction that’s been done so far after widespread and prolonged closures of millions of businesses.
So many questions hang out there—questions on the minds of millions around the entire world, particularly in America, the leading nation in the global economy.
• Will the economy bounce back? If so, how long might it take?
• Will more government stimulus be needed?
• After the new normal, can we ever go back to the old normal?
• What will be the political fallout at election time?
• Have America and other nations committed some kind of economic suicide?
One thing is for certain. People who say they know what will happen to the economy—whether they are “experts” or not—do not actually know. They are all speculating or giving educated guesses. Things will not bounce back overnight. The house that’s been (at least partially) burned down will not magically be restored in an instant.
Straw polls in an American suburb
Over the last three months I worked a side gig in food delivery services. I interacted with thousands of people affected in various ways by the Covid-19 pandemic. Everyone had a story to tell, and I asked a lot of questions. I conducted countless on-the-fly interviews and informal polls.
In the first few weeks of the shutdown, I estimate that around 40 percent of those I asked said they were out of work—laid off, furloughed or outright fired.
An employee at a hotel, part of a large chain, said it was at only 3 percent capacity. This is practically zero. Multiple hotels had to shut down entire floors.
Another hotel clerk told me that 90 employees in just that one hotel in just one suburb had been laid off.
The majority of people I spoke with had fear, worry and uncertainty in their eyes.
People are on the edge. Hunger and food insecurity has become a real problem for some. In cities around the nation, families in cars waited in lines that stretched for miles to visit food banks. As a father of three young children, I can only imagine what was happening in each of those cars—the crying, the questions, the forced patience, the confusion, the anxiety—as hungry children waited for hours in a slow-moving line to get access to food.
From record employment to record unemployment
Never before have so many people around the world been out of work so fast. From record-low unemployment figures in the United States early in the year, in just two months 36 million Americans filed unemployment claims. This statistic is almost impossible to comprehend.
A headline in early May painted a sobering picture of how quickly America’s roaring economy has collapsed, declaring, “The Jobs Report Friday Will Be a Portrait of Devastation.”
The article stated: “If the consensus forecast by analysts—that employers will cut 22 million jobs from their payrolls—turns out to be correct, 10 years’ worth of job growthwill have beenwiped out in a single month. The expansion after the last recession was late and slow in ways that were destructive to millions of people’s lives. But America had finally recovered. And now, in a single month, a decade’s worth of progress . . . has vanished. The numbers may seem dry and impersonal, but beneath them are the individual and distinctive stories of millions of people” (Neil Irwin, The New York Times, May 7, 2020, emphasis added throughout).
And then there were those who were unable to file unemployment claims due to issues in the application process:
“With unemployment benefits agencies buckling under the strain of new applicants, even that figure [36 million] is likely a severe undercount. A report from the Economic Policy Institute published last month [April] found that for every 10 people trying to apply for unemployment, three to four couldn’t get through the system to make a claim, and another two out of 10 said the process was too complicated to try” (Colin Letcher and Mia Sato, “How Unemployment Systems Are Failing Workers Around the Nation,” The Markup, May 7, 2020).
This was the case with one woman I talked to a few weeks ago. She’d been laid off from a daycare business but couldn’t apply for unemployment—the website kept crashing and the phone lines were busy. She tried for a week with no success. Maybe she eventually got through. Hopefully.
Thankfully the jobs report in early June was more hopeful than many thought it would be, as 2.5 million jobs were added, mostly in the restaurant industry. But unemployment remains terribly high. This is the new economic normal for individuals. What about companies?
While the U.S. federal government’s Paycheck Protection Program helped offset some of the pain, the landscape is bleak for American businesses. Many companies could not afford to lose two to three months of income.
A survey in early May showed that 52 percent of small businesses across America expect to be out of business within six months: “New research released today by SHRM (Society for Human Resource Management) warns the state of small business could go from bad to worse, as 52 percent expect to be out of business within six months. The survey . . . identifies significant, widespread economic pain—such as layoffs, furloughs, and lost revenue” (“Covid-19 Could Shutter Most Small Businesses,” press release on Business Wire, May 6, 2020).
And some of the surviving ones don’t plan to rehire all the workers they had to lay off. A new study reveals a sobering reality for workers who thought their jobs would be waiting for them after the pandemic leveled off:
“Of small and medium-sized businesses that have been forced to shut down during the coronavirus pandemic, more than half of owners surveyed by Facebook said they won’t rehire the same workers they had before the crisis . . . Facebook said it surveyed 86,000 small and medium-sized business owners, managers and employees . . .
“The report highlights the lasting economic impact of the coronavirus and the especially dire effect it’s having on smaller businesses without the same level of access to capital that larger corporations often have” (Lauren Feiner, “Coronavirus Devastating Small Businesses: One-Third Won’t Reopen, 55% Won’t Rehire Same Workers, Facebook Survey Finds,” CNBC, May 18, 2020).
Layoffs and bankruptcies mount
It’s not just mom-and-pop businesses being hit. In late April, Google slashed its marketing budget in half and froze the hiring of full-time and contract workers.
A number of other big companies announced dramatic changes. Online travel lodging marketplace Airbnb announced it was laying off 25 percent of its staff. “It’s an ominous sign for the tech economy. Brian Chesky, the company’s founder and CEO, told staff . . . that the company’s revenue would be halved and that it would terminate about 1,900 of its 7,500 staff members” (Theodore Schleifer,“The Layoffs at Airbnb Cast a Dark Shadow Over Silicon Valley,” Vox, May 5, 2020).
Ride-hailing business Uber “is also reportedly in the process of mulling layoffs that could account for about 20 percent of its staff. Lyft has already laid off about 17 percent of its workforce” (ibid.).
In early May the clothing retailer J. Crew announced it’s filing for Chapter 11 bankruptcy, followed not long after by Neiman Marcus, J.C. Penney and Tuesday Morning. If such steps are being taken by some of America’s largest companies, how many smaller or medium-sized companies can stay afloat?
We could point to many more examples, and it’s still just the tip of the iceberg. The overall picture is sobering. America and the rest of the world at large have a long road of recovery ahead of it. Hard times are before us. But there is still hope.
God’s “predictions” laid out in advance
No one knows exactly what will happen to the national and global economy in the weeks and months ahead. But while economists and experts make their educated predictions, God who rules over the universe has issued His own “predictions”—not guesses but sure prophecies, which He will bring to pass in His infinite power!
Through His Word, the Bible, God reveals what lies ahead for this world, including the United States of America and other English-speaking nations specifically. The Bible’s promises and prophecies, including some already fulfilled, outline an inspiring, sobering and ultimately hopeful picture of what lies ahead for America and all of mankind.
In these uncertain times, you can learn the truth about the future, all laid out in in the pages of the Bible. Understanding the identity of the United States in prophecy, realizing why it’s played such a leading role in the global economy, opens up doors of knowledge that will forever change how you see the world, including your own future.
Seek out what God has to say about these matters, hold fast to the direction He gives, and He will lead you to the best possible outcome.
Three Things You Can Do
All this economic bad news can leave us feeling depressed and overwhelmed. But you don’t have to wait for conditions to change to get on the path to economic stability. Here are three practical things you can do to weather the storm.
1. Create a Monthly Budget
A personal budget is crucial to getting a handle on how much money you are making and spending each month. Without preparing ahead of time what you will spend, including big bills that are coming up, it’s very difficult to make progress. Many free tools are available that make it easy to create a budget. Don’t wait until the next crisis! Start the habit now of making and sticking to a budget.
Forcing yourself to put some of your income into an emergency fund is one of the most important ways you can prepare for difficult times. Unexpected expenses always come up, and a certain amount of savings can make all the difference. Experts recommend having at least $1,000. Ultimately, after other goals are met, like paying off credit cards or other loans, it’s a good idea to have around three to six months of income in the bank in case of job loss, health trials, etc.
3. Avoid Debt
It’s not always possible to totally avoid using credit cards or other types of debt when life hands you lemons. But credit cards should be avoided as much as possible, and paid back as soon as possible. High interest rates will suck the life out of your future financial security. If you need short-term help, it’s almost always better to have the humility to ask family members for help if they have the means. Proverbs 22:7 says that “the borrower is slave to the lender.” Debt can rob you of control over your future. To learn more, download or request our free study guide Managing Your Finances.