by Paul Grossman
As of today, the impact of the coronavirus pandemic in the U.S. is still in its initial stages, from a health perspective. Over 42,000 cases and 512 deaths have been reported, placing the U.S. as the third largest country for COVID-19 activity after China and Italy. 12 states have imposed stay-at-home orders (strict guidelines for movement of people), and have shut down all but essential businesses. However, the list of essential businesses is long, including hospitals, pharmacies, manufacturing facilities, distribution centers, grocery stores, etc. Projections are for COVID-19 cases to continue to rise rapidly over the next several weeks, as more tests are made available.
The impact of the epidemic on the U.S. economy has been severe and swift. All major stock exchanges (DOW, NASDAQ, etc.) are down 35% from their recent highs. Estimates are that 2.5 million people may file for unemployment this week alone. Longer term projections include a national unemployment rate as high as 20%.
The sectors most affected include travel and transportation, food and beverage, and leisure & entertainment. Major manufacturers have closed assembly plants to protect their workers, including: Boeing, General Motors, Ford, etc. All major sporting events have been postponed, including the NBA, NHL, PGA etc. Many public school systems and universities have been closed for the rest of the school year. State and local governments and major businesses now have employees working from home, with most estimates that this will last until the end of April.
All eyes are on the U.S. Congress as it readies a massive plan of financial support. What was a $1+ trillion package of assistance has increased to $2+ trillion in the past four days. Currently, the Republicans and Democrats have not come to agreement on the specifics of the package, but both parties state that a deal is “very close.” Some components of the package that are known include: direct payments of up to $1,200 for most individuals, full pay for workers for up to four months, financial assistance to the travel and transportation sector, tax relief to small businesses, etc. This package follows on the heels of a March 4th $8.3 billion package, and a March 18th package including free testing for all Americans, and $1 billion for unemployment insurance claims. At the state level, resources are being re-directed to helping existing companies apply for federal loans, federal disaster assistance, and other state benefits.
Overall, the sentiment is that “things will get worse before they get better.”
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