(Tiểu Luận) Analyze America’s Economic During And Aftercovid-19 Pandemic Via Economic Indicators..pdf

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TRƯỜNG ĐẠI HỌC KINH TẾ - ĐẠI HỌC ĐÀ NẴNG BỘ MÔN NHẬP MÔN KINH DOANH

GROUP ASSIGNMENT REPORTMODULE: INTRODUCTION OF BUSINESS

CLASS: 49K25.1

Đà Nẵng, 2024.

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The COVID-19 pandemic hit the United States in early 2020, changing thelandscape of the nation. The first confirmed case emerged in Washington state onthe 20th of January - a 35-year-old woman who returned to Everett after she wasbelieved to become infected with Covid-19 while in Wuhan, and then it spreadwidely throughout the country. By March, the World Health Organization declareda global pandemic. The US government responded quickly with a nationalemergency declaration, leading to lockdowns, travel restrictions, and socialdistancing measures to slow the spread of the virus.

This highly contagious disease overwhelmed healthcare systems during peakinfection periods, straining resources and personnel. The economic impact wassignificant, with businesses forced to close or operate at reduced capacity, leadingto job losses and financial hardship. Social life was also disrupted by schoolclosures, travel restrictions, and the need for social distancing, creating a sense ofisolation for many.

Analyzing economic indicators to predict future development is always acore issue for the economies of countries worldwide, especially during and after theCOVID-19 pandemic. Knowing the changes in factors that make up an economysuch as GDP growth, unemployment rates, and consumer spending can help controlrisks, and the government can establish some measures to stimulus economy Fromassessing the impact of the pandemic, governments can promptly introduce fiscalpolicies and loan packages to support enterprises and workers, then evaluate theeffectiveness of the applied strategy. In the pandemic period, the world economy islikely to face an economic crisis during the epidemic situation, so analysis ofeconomic indicators will help navigate the economy through challenges, creating apremise for sustainable development.

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MỤC LỤC

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I. Impact of COVID-19 on the Economy:1. GDP (Gross Domestic Product):

Gross domestic Product is the market value of all final products and servicesthat are produced within the border of a country in a specific period of time.

1.1. Overview of GDP trends of US before, during, and after the pandemic:

Before the COVID-19 pandemic, the GDP growth rate of the US grew stablyfrom 1960 to 2019 according to the report table of the US GDP growth rate . In1

2020 there was the COVID-19 pandemic breakout in the first quarter of this yearwhich means many workers lost their jobs and businesses had to be closed. For thisreason, the GDP growth rate in the second quarter of 2020 decreased significantly.

Felix Richter,2023. However, after the pandemic, which is about 4 years until nowthe GDP growth level has recovered remarkably.

1.2. Changes in GDP growth rates:

At the time before the COVID-19 hit the US GDP growth rate, there was afirm rise between 1960 and 2019 in the GDP growth rate of the US, and in 2019 theGDP growth rate of the US was 2,29% based on the data from “US GDP GrowthRate 1961-2024”of Macrotrends. When the first case of Covid-19 appeared in thefirst quarter of 2020, the GDP growth rate of US collapse significantly by about10% in compared with the fourth quarter of 2019. After that, the GDP in US hit alowest point at -28% in the second-quarter of 2020. Surprisingly, in the next quarterthe US GDP re-increased spectacularly to reach a peak at 34,8% following the dataof United States GDP Growth Rate from Trading Economics, and then the US GDPgrowth rate continued to go up remarkably to exceed its pre-pandemic level and inthe second quarter of 2021 the US GDP grew at a rate of 6.5( Jeffry

1Hoavic. 2021. “GDP Của Hoa Kỳ.” Số Liệu Kinh Tế. September 24. < long to read onyour phone? Save

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Save to a Studylist

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Bartash,2021 ).In short, GDP growth rate in the US experienced variousfluctuations due to the coronavirus pandemic.

2. Unemployment Rate:

2.1. Impact of the pandemic on employment levels

The employment levels of many countries, including the United States havebeen affected considerably by the coronavirus pandemic (Annabel Walker,2021 ) .InMarch of 2020, because of lockdowns and social distancing measures the USeconomy had to be shut down, and in many businesses only pivotal personnel couldcontinue to go to work to restrict the spread of the pandemic. ( Lexi Lonas,2022.)

Meanwhile, there was a more serious effect on certain industries than otherssuch as the leisure, and hospitality sectors including restaurants, bars, amusementparks, and hotels (Candice Norwood,2020). Moreover, commuting inner city andtraveling around the world have been significantly limited due to flight cancelationand the reduction in capacity (Joseph B. Sobieralski,2020) . Besides, job losses alsohappened due to low wages and low working hours during the pandemic, especiallyin leisure and hospitality sectors (Elise Gould and Melat Kassa,2021) . Inconclusion, the COVID-19 has impact seriously the employment levels in the US.

2.2. Changes in unemployment rates across different sectorsThe leisure and Hospitality sector:

Before the hard hit of the COVID-19 pandemic, the unemployment rate inthis sector in the US was stable at about 4% to 7%, which is quiet low. Hence, inFebruary 2020 the unemployment level rocketed to 39.3% due to the disease withcomplicated progression but from this level, the unemployment rate went downimpressively to 14.7% in October 2020 and then continued to decrease to areasonable level of 6.6% in February 2022 following the data from U.S Bureau ofLabor Statistics.

Transportation and warehousing sector:

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At the outset of 2020 which means when the first case of COVID-19 wasfound on 25 January in Seattle, Washington (th Alan J. Stein,2020), theunemployment level of the transportation and warehousing sector was still at a lowlevel which about 3.8%. Subsequently, the unemployment rate suddenly increasedenormously to 15,7% in July 2020 which was about 4,7% higher than the totalunemployment rate in the US at that time. Following the unemployment peak, thepercentage of unemployment fortunately recovered promptly to decline to anacceptable level of 9% at the beginning of 2021 as stated by the data from theBureau of Labor Statistics.

Construction sectors:

After reaching a peak of 27,1% in the unemployment rate of the constructionindustry in February 2010, there was a downward tendency in the unemploymentrate. However, from the second quarter of 2020, this unemployment rate reached apeak of 16,6% due to the Coronavirus Disease. Afterward, the loss-job rate fellintensively and stabilized around 3% and 7% as described in graph from the FRED-economic date.

Manufacturing sectors:

In the manufacturing industry, the unemployment rate has a similar trend tothe construction sector. Specifically, there was a gradual reduction in themanufacturing sector’s unemployment rate from 2010 to the end of 2019. After aslight growth in the first quarter of 2020, the next quarter which was when thedisease was at its peak, the job-loss percentage witnessed a massive leap to 13,2%in April 2020. In the months, from this impressive high level, the manufacturingunemployment rate began to hit a trough of 1,8% and then hovered around 2%according to statistics from the FRED-economic date.

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To sum up, the Coronavirus Disease has had a significant impact on manyindustries especially the leisure and hospitality sectors with 39,3% in theunemployment rate in February 2020.

3. Consumer Spending

The breakout of the COVID-19 pandemic has created a wave of decrease inconsumer spending in the USA in 2020. At the beginning of 2020, the lockdownorder was enacted in the US and most of the countries in the world causing adiminish in all aspects of the world, from economic, social, education,entertainment, … According to a report from the US. BUREAU OF LABOURSTATISTICS, there has been a decrease of 9,8 percent in consumer spending inquarter two of 2020 when compared to the same period in 2019 . At the beginning2

of 2020, the lockdown order was enacted in US and most of the country in theworld caused a diminish in all of the aspect of the world.

3.1. Shifts in consumer behavior during the pandemic

The first Covid - 19 case was detected in the US on January 21, 2020 and quicklyspread across the states. But the government was not aware of this situation, theTrump administration continued to encourage the implementation of reopeningmeasures to stimulate the economy; however, as a consequence, the situationworsened, and the economy experienced a significant decline (Wikimedia). Therewas a drop by 29% immediately after the first wave of the pandemic, this drop waseven larger than the financial crisis in 2007 - 2009 (Ali AbdullHussein and colleges,2022) . Overall, this declines due to the buying behavior of consumers, they spent3more for normal goods and health - care goods and less for inferior goods. In the

2Changes to consumer expenditures during the COVID-19 pandemic. (n.d.). Retrieved from class="text_page_counter">Trang 8<div class="page_container" data-page="8">

lockdown time, the demand for online buying has increased a lot and some commerce giants like Amazon experienced a period of breaking sales records.Compared to last year, Amazon's net profit was up to 84% and annual revenue up38% to $386 billion (Shelly E. Kohan, 2021)4

e-3.2. Recovery of consumer spending post-pandemic

The post-covid 19 economic recovery in the United States is generally asignificant step forward, but uneven across sectors . After the pandemic, customers 5

in the US seem to have spent more for durable goods rather than non-durable goodsand services (U.S Bureau of Economic Analysis). The 2020 data shows thatAmericans spent around $12,5 trillion for goods and services, and this is more thanhalf a trillion less than last year. With the growth of population of about 2,5 millionpeople per year, it will take until 2023 for American residents to return to pre-pandemic spending levels. (Thomas Mitterling and colleges, 2020) 6

4. Business investment

4.1. Effects of economic uncertainty on business investment

3AbdulHussein, A., Cozzarin, B., & Dimitrov, S. (2022). Changes in consumer spending behavior during the COVID-19 pandemic across product categories. Retrieved from S. E. (2021). Amazon’s Net Profit Soars 84% With Sales Hitting $386 Billion. Retrieved from

Reserve Economic Data: Your trusted data source since 1991. (n.d.). Retrieved from Wu, M. T., Eswar Prasad, C. S., Brooks, R., & Daniel S. Hamilton, J. P. Q. (2022). The decline and recovery of consumer spending in the US. Retrieved from class="text_page_counter">Trang 9<div class="page_container" data-page="9">

Under the impact of the pandemic, businesses in the US in the first half of 2020had a significant decline, but were able to recover after only a short time (DanielBachman, 2022) . Businesses tend to invest in short-term projects instead of long-7

term projects, facilitates or new equipment. The pandemic also brought somedifficulties for businesses in accessing investment loans, especially for small andmedium enterprises (Alexander W. Bartik, 2020) 8

4.2. Government policies to stimulate investment

The Federal Reserve System (FED) has introduced a number of measures tostimulate economic recovery such as reducing interest rates, loans and assetpurchases as well as changing some regulations (Gabe Alpert, 2023) . Also in this9

period, one of the measures of FED to support the economy and financial marketincluded lowering interest rates to near zero and establishing the lending facilities tosupport the enterprises, ... (Alexandria White, 2021) 10

III. Government Responses and Economic Policies

7Bachman, D. (2023). Is the writing on the wall for buildings? Business investmentsince COVID-19. Retrieved from

A. W., Bertrand, M., Cullen, Z., Glaeser, E. L., Luca, M., & Stanton, C. (2020). M Proceedings of the National Academy of Sciences , M 117 (30), 17656–17666. doi:10.1073/pnas.2006991117

9Alpert, G. (n.d.). U.S. COVID-19 Stimulus and Relief. Retrieved from A. (2021). Fed rate cut lowers interest rates to near zero-but how much are you really saving on your credit card debt? Retrieved from

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The COVID-19 pandemic has caused a global economic shock wave, sending the US economy into recession. Businesses closed, unemployment skyrocketed and economic activity plummeted. In response, the US government embarked on unprecedented fiscal and monetary policy interventions to mitigate thecrisis and spur recovery. Assess and dive into the pandemic's impact on the U.S. economy, analyze the government's multifaceted response, and explore the lingeringuncertainties shaping the path forward.

The pandemic's initial attack on the American economy was swift and brutal. Social distancing and lockdown measures have paralyzed economic activity across various sectors, especially tourism, hospitality and retail. Gross domestic product (GDP), the total value of goods and services produced, fell a staggering 3.5% in the first quarter of 2020, marking the sharpest decline since the Great Depression. The unemployment rate spiked to a staggering 14.7% in April 2020, 20.5 millions people lost their jobs . Consumer spending, the driving force of the 11

US economy, plummeted as anxiety soared

A. Fiscal Policy:

1. Overview of government spending measures during the pandemic

To deal with this economic disaster, the US government launched a pronged attack. The cornerstone of its fiscal response was the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) , the largest economic relief 12

multi-package in US history and marking the third and largest major legislative initiative to address COVID-19 to date. It includes several health-related provisions focused on the outbreak in the United States, including paid sick leave, coronavirus testing coverage, nutritional assistance, and programs and another effort. The CARES Act also expanded unemployment insurance benefits, offering a lifeline to those who lost their jobs. In addition, the Paycheck Protection Program (PPP) provided forgivable loans to small businesses, helping them retain employees and weather thestorm.

Besides financial stimulus, the Federal Reserve deployed its monetary 13

policy arsenal. It cutted interest rates near zero (the funds rate to a range of 0% to 0.25%) making borrowing cheaper and encouraging spending and investment. Moreover, the Fed executed a program of Quantitative Easing (QE) and shifted the objective of QE to supporting the economy. The Fed doubled its speed of tapering,

11 U.S. unemployment rate soars to 14.7 percent, the worst since the Depression era (2020)

12The Coronavirus Aid, Relief, and Economic Security Act: Summary of Key Health Provisions (2020) < did the FED support the US economy and financial markets <response-to-covid19/>

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