One Year Later, How Has Covid-19 Affected the US Economy? by Ari F.
The United States economy consists of many aspects: the stock market, different businesses, consumer spending, the unemployment rate and many other components, and each has been affected by COVID-19. The stock market plummeted at the beginning of the pandemic but has recovered and was recently at an all-time high. Businesses around the country were forced to close, and millions of dollars were inserted into the economy by the government in the form of stimulus checks, all because of the pandemic. As vaccination rates are increasing every day, and the pandemic is coming to a close, will the economy continue to recover?
Shortages of Everyday Items Put Pressure on Businesses
With everyone initially stuck at home, their to-do lists and DIY projects grew. Americans finally had the time to fix their kitchen, build a shed, or put up a new shelf. Many of these at-home projects required lumber. Supply was abundant at the time, but as the pandemic spread, the lumber mills began to shut down. Most shut down due to safety concerns, or they couldn’t find enough people to work. Demand for wood returned, and now lumber prices are the highest they've been in decades. On April 26, 1,000 feet of wood cost $1,372, compared to less than $500 last April, according to The National Association of Home Builders. Many experts say the shortage will end by the end of 2021, while others say it might continue into 2022. This issue is similar to hundreds of other businesses around the US. The chlorine, used car, computer chip, and even the chicken wing industries are going through the same problem. The resource isn’t necessarily always the problem, but rather it's the lack of workers needed to process them.
On the contrary, the gas shortage had nothing to do with the pandemic. A group of hackers hacked into the Colonial Pipeline, which is the main pipeline that delivers oil and gas across the East Coast. This caused gas prices to rise 200%. One gallon of gas cost almost $10 in some states. People rushed to gas stations, filling up every single bucket and trash bag they could find with gas. North Carolina even had a statewide emergency after the little supply of gas they had ran out. After realizing they didn’t have the time to find or negotiate with the hacker, Colonial Pipeline paid the $4.4 million ransom.
Why Was the Job Growth Rate Predicted To Rise, and Why It Disappointed
With the New York Times reporting that over 70% of older U.S. adults are fully vaccinated and in some U.S. counties, nearly all people over 65 are vaccinated, people are beginning to believe that the pandemic is coming to an end. The government hoped that the job growth for April would skyrocket, as vaccinated people would return to work or find a new job. Dow Jones had estimated that there would be 1 million new jobs and an unemployment rate of 5.8% for April. The final number, however, surprised everyone. In April, the economy only created 266,000 jobs and the unemployment rate rose to 6.1%.
There are two reasons why I believe that the final numbers fell short of the government's expectations. First, the government believed that just in a few weeks, everything would go back to normal. Just because the majority of adults are vaccinated, it doesn’t mean they are rushing back to work. There are still millions of young adults who are not vaccinated, and young adults are a large majority of people looking for jobs, especially those just graduating from college. The second reason why the data is disappointing is the absence of child care options for working adults. There are still many pre-schools, daycare centers, and elementary schools still closed due to COVID. According to TheLilly.com, 20,000 daycare centers have closed during the pandemic. Even if a parent can find an open place, child care remains expensive and unreliable. ChildCare Aware of America stated that “the average cost of center-based daycare in the United States is $11,896 ($991 per month) per year for infants and $10,158 per year ($847 per month) for toddlers.” This has caused many parents to be stuck at home, taking care of their children, and unable to look for work.
Small Businesses Face Fight of the Century
In today’s world, large companies like Apple and Amazon dominate the economy and have monopolies over huge consumer markets. While everyone stayed at home, Amazon had one of its best years in history, bringing in $386 billion in revenue in 2020, an increase of $100 billion from the previous year, and their net profit was up 84%. This left many small businesses around the country helpless, as they were unable to compete against Amazon and their massive scale. A number of small businesses were forced to close due to the virus, and after months of no profit, millions of small businesses had to close down forever. A survey from the Federal Reserve discovered that three out of every 10 small businesses in the U.S. say they likely won't survive 2021 without additional government assistance during the coronavirus pandemic. This means that 9 million businesses are expected to close by the end of the year. This is one reason why the job growth was so small this past month, with so many small firms closed or closing, the possibility of new jobs for many people also vanished.
Time Will Tell
The government, media, and stock market can all try to predict what might happen to the economy when the pandemic is over, but we won’t know what actually happens for some time. Small businesses and child care centers have to reopen before we know how many jobs will be created and filled. The manufacturing industry has to regroup and have time to start back up again before we know when the shortages will end. The wait is over for vaccines to arrive and schools to reopen, but we will all have to be patient to see how long it takes for the economy to recover.