Assignment task: The COVID-19 pandemic has had a profound impact on the economies and has been exacting pressure on the governments since it began in March 2020. The sudden outbreak of the virus and the late measures taken to contain it led to widespread business closures, job losses, and a sharp decline in economic activity worldwide. Countries around the world had to ask small businesses to close to stop the spread of the virus (Amadeo, 2021). The pandemic has affected nearly every sector of the economy because a sudden stop in the economy led to an unprecedented increase in the unemployment rate, a reduction in consumer spending,Technology and a significant blow to small businesses. There is an ongoing debate among the economist's that affluent countries were not much affected as developing countries because of the pandemic. Economists need to understand the how the extent and severity of the impact varied greatly between developed and developing countries.
However, I claim that United States the biggest country in the world in terms of Economy has been affected a lot, especially in terms of their GDP, Unemployment rate, inflation rate, and technology in terms of chip shortage but economists were not able to notice, because at that time everyone was too focused on who to blame for the virus instead of focusing on the problems at hand. This article argues that how COVID has had detrimental effects on the world to which the US economy was no exception, I will provide reasons for my argument by using specific effects of the pandemic on the GDP, employment, Inflation, and its impact on the US economy in coming years. As we are still learning to continue to grapple with the ongoing effects of the pandemic, it is important to understand how it has affected the economy and what steps can be taken to mitigate its impact.
Terms:
"Developed countries" and "developing countries" are the two terms used in the world categorize countries based on their level of economic development which is how much a country grows and improves over time. A developed economy is typically a country with a relatively high level of economic growth and security. Whereas terms such as "developing economy" or emerging economy are those countries that do not enjoy the same level of economic development and security as the developed countries (Majaski, 2019).
GDP:
There is often a misconception even between economists that the bigger the size smaller the effect but, it is the opposite. Effects of COVID on GDP of the united states were far more severe, then what the economists who debated that due to the bigger size of the US economy it will be less affected, than the developing countries but they were wrong as the effects were much more severe than anyone had imagined. As, the US GDP is large it needs to have more stability, even a small change will have bigger impact on it as compared to a same change experienced by a developing economy (L. Zeager, personal communication, January 24th, 2023). The GDP suffered a major setback, was hit particularly hard by the pandemic which in turn had significant impact on the overall growth of United States, because of sharp declines in economic output. This was due to a multiple factor, including widespread business closure and reduced consumer spending." According to the Bureau of Economic Analysis, the US economy shrank by 3.5% in the first quarter of 2020, marking the worst economic performance for the US since 1946. (Mutikani, 2021).Whereas for the Fiscal year of 2020 the economy contracted a record 31.2%. (Amadeo, 2021).The percentage seem to be small as compared to a developing countries. But to bring it into perspective consider the size of the US GDP is 27.5 trillion, 31.2 % contraction means that 8.5 trillion dollars were lost this is now a bigger number because when we compare it with 5 largest developing countries their combined losses and gain are much lower than this.
But to say that economy is not mature than other developing economies would be very wrong as the US economy has shown some signs of recovery, but the pandemic's impact on the GDP is expected to be long-lasting than some economists had expected. According to the Congressional Budget Office "who expect that the US economy will not return to its pre pandemic level until 2025 (Congressional Budget Office, 2021). This is something to look at for economist that said the US Economy will not be affected much.