The causes of this crisis came fast and suddenly without anyone expecting it. Partially because where the first cases were detected, was in a country where information is rationed, and also because no one predicted such aggressive and rapid contagion, which makes containment of said virus extremely hard to manage.
And the effects? Enormous, and unfortunately this is just the beginning. In my opinion, this is just the big wave of a larger crisis that has yet unfolded. With the initial reaction of the evident fall in consumption, the closing of several commercial stores, and mass unemployment. In which the most serious case of this is in the United States of America, another wave of infections should be expected.
If we go back to the26th of March when the expected unemployment numbers hovered around 1.5 million, something never seen before, the actual number reached 3.3 million. A week later, it got worse, the expected numbers were 3.6 million, but then, the real numbers came out as an astronomical 6.6 million. Yes, in just two short weeks, the number of unemployed people in the USA surged 10 million.
If we quantify the numbers, those 10 million represent around 6% of the workforce, which in turn translates to an unemployment rate of 10%. On the 9th of April, forecasts pointed to 5 million people out of jobs. In other words, it would raise the USA’s unemployed rate to 13%, the highest unemployment rate of the last 70 years.
Source VOX (April 2020: https://www.vox.com/2020/4/2/21203850/unemployment-initial-claims-march-28)
The effects we’ve been seeing until now, should, in theory, be only the first reactions to a larger economic crisis. In spite of the 1200$ offered in March by the federal government, it’s doubtful that these measures won’t have a beneficial long-term effect on the economy, given the magnitude of the recent collapse and the ineptitude of the USA to protect its citizen’s welfare.
It’s important to realize that the average person can’t simply avoid some basic financial commitments, like for example:
- Personal food expenses and other home utilities.
- Hospital treatment expenses, which in the context of this pandemic, will be inevitable. And considering most people get health insurance through their work benefits, the costs will be steep.
- Loan expenses, car loans, and long-term mortgages will see an increase of risk of default and possibly add even more pressure to an already fragile economy.
What’s left to know is the degree of assistance the average person will get from its government, because if more help doesn’t come, harder days will be upon the USA.