COVID-19’s Effects on the U.S.

Economy

Thomas Molnar

English 138H

Professor Babcock

20th April 2022

Introduction

The virus that swept the world, Covid-19, has drastically affected social and political

spheres, but its affects have arguably been the most severe on the economy. People have been let

go from jobs, gone into debt, lost their homes, and struggle to feed themselves and their kids.

Most countries were not ready for this pandemic, which is evident from the numbers, but poor

countries were especially hit hard.i In the United States we are getting close to pre-Covid

economic levels, but the nation is still not back to 100% yet. It is important to take a look at what

areas and groups of people that suffered the most and explore why. Additionally, looking at the

governmental strategies in America and how successful they were is crucial in preparing

America and the rest of the world for if anything like this ever happened again, God forbid.

Covid-19 has taught America and the world a lot of lessons that will not be forgotten soon and

analyzing its effects and the progress of recovery in the world is how humanity will be prepared

for another pandemic.

GPD Analysis

Looking at how the world GDP was impacted gives a global perspective of how

devasting this virus was. The global GDP was expected to have a 3.4% growth in 2020, but

rather it was reduced by 3.5% as reported by the April 2021 World Economic Outlook Report

published by the IMF.ii This essentially means that the entire world is behind GDP wise by about

1 year, which is a massive reduction of the global economy. Even once countries hit pre-Covid
levels, they will still be behind GDP wise of where they were estimated to be if there was no

pandemic.

Lack of Food

The economic drought that ensued from Covid affected people to their very basic human

needs. It is not as if people had to give up luxuries during the pandemic; many were sacrificing

eating in order to pay rent and stay afloat. In December of 2020, 14% of American adults

reported that their households did not have enough to eat in the last seven days; as of October

2021, this number had fallen to 9%.iii America has slowly but consistently been reducing this

number.

iv

Looking at the graph we can also access the successfulness of the government’s relief

plan. In mid-March most adults received their payment of $1,400, and the graph does show a

drop in March. However, by June 2021 the percentage was back to about 9.8%, whereas before
March if was 10.5%. It dropped to a low of 8% in between March and May. This shows that the

relief package did have an immediate benefit and provided relief to millions of Americans, but

after around 3 months it was nearly back to the level it was before the relief package. This means

that monetary relief packages do help in food shortages, but that is all they are, relief. They do

not actually address the problem at hand, which is lack of employment. So in the future these can

be used again, but only in dire situations and not for long; instead means to increase employment

should be pursued as long term solutions. Adults with children were of course more likely to

experience a food shortage, so families with children were hit harder. We can also assess the

government’s first monthly Child Tax Credit payment’s affects on food shortages. The first

payment for families with kids was in July, and it can be seen that this also resulted in a drop.

Just as with the other relief payment, the rate of adult households without food jumped back up

to a similar level and eventually to the same level as before the payment.

Looking at how different races of people were affected in America also helps to reveal

and identify problems present in our country.

v
 In October, where on average 9% of adults experienced food shortage, the number is

significantly higher for Black, Latino, and other/multiracial. This can be a result of multiple

factors, which are difficult to pinpoint one. These groups could be living paycheck to paycheck

and were therefore at a loss of money for food when they like many Americans lost their job. It

could be a result of workplace racism and getting unfairly fired. More than likely these groups

were more affected because of their already inhibited pre-Covid status. “Several pre–COVID-19

economic conditions—including lower levels of income and wealth, higher unemployment, and

greater levels of food and housing insecurity—leave Black families with fewer buffers to absorb

economic shocks and contribute to Black households’ vulnerability to the COVID-19 economic

crisis.”vi These groups were essentially at an economic and social disadvantage before Covid, so

when it hit they suffered the most right off the bat.

Job Loss

As the heart of the food shortage issue for households is due to lack of money, the real

issue is then the large layoff that happened at the start of Covid. In April of 2020, unemployment

hit a level that has not been seen in America in nearly 100 years: 14.4%.vii Some estimates even

suggest that in May the rate was as high as 16%, although this cannot be confirmed.viii On top of

this, even if employees were not fired, many had to take pay cuts during the pandemic.

Employers simply did not have enough customers and money coming in in order to continue

operating at the levels that they were. Employers had no choice but to cut wages and to fire

people because they no longer had enough income to support them.

 ix

This infographic is from the Pew Research Center and shows the percentage of adults that

had to do take an action to help cover money problems, for both adults where someone took a

job loss/pay cut in their household and in households where no one did. It is clear that those were

suffered a job loss or pay cut suffered much greater financially than those who did not, at nearly

three times the rate of those who were unaffected.

The government did offer those that were jobless with extended benefits during 2021, but

normally these individuals would be at a loss. Many argue that the American system does not do

enough for those without jobs, and that they do not get their appropriate benefits.

It is also important and interesting to note which kinds of jobs wage-wise were fired.

From February 2020 to October 2021, low-wage jobs decreased by 4.5%, medium wage by

2.6%, and high wage jobs by 0.3%.x Lower wage jobs were disproportionately fired in

comparison with how many there are in relation to higher paying jobs. Naturally however, those

that have lower paying jobs have less money saved because they need to use most of their

paycheck in day-to-day month-to-month expenses. This corresponds to those in lower wage jobs

to having a harder time being fired than those in high wage jobs. Therefore, the fact that this
wage group experienced the majority of job losses is extra difficult for them because they simply

were not prepared for this pandemic.

It is also key to look at race differences here as well. When comparing job recovery rates

for Black and Latino workers to White workers, Black and Latinos are having slower job

recovery rates. This is also most likely rooted in corporate racism that has been going on for

generations.

Rent Struggles

Along with all of the other economic issues present, millions of Americans struggled to

pay their rent during the Covid pandemic, and many even became homeless because of it. At its

peak in January of 2021 15 million people reported that their household was not caught up on

rent; this number fell to 10 million in the fall of 2021.xi In October of 2021, this number was at

12 million, which corresponds to 16% of adult renters. Race differences were also present in

those unable to pay rent, with Black being most affected, then Asian, then Latino, then

multiracial and finally White being least affected. The amount of renters with children that are

behind on rent is also twice as high as those without anyone under the age of 18 living in their

household.

During the housing crisis caused by Covid, it was estimated that 30 to 40 million

Americans were at risk of losing their household.xii An estimated one-third of Americans live in

rental properties, half of which spend 30% of their paycheck on rent dues.xiii This corresponds to
millions and millions of people that were affected and could potentially be living on the street

because of a situation out of their control.

The government also issued plans to help those that were in danger of being evicted. The

CDC issued a 120-day moratorium in March of 2020, and then a broader one in September.xiv

This is a temporary solution; however, it is a crucial one. They were able to do this because their

job is to prevent the spread of disease, and when people are evicted, they can no longer stay at

home inside and avoid contact with others. Therefore, eviction would result in higher disease

rates, so they were allowed to prevent that. There is also plenty of stories of landlords who felt

remorse for those affect by Covid and gave them some due forgiveness, showing compassion. It

has also been shown that in areas where moratoriums are in effect, the people are less likely to

contract and potentially die from Covid, showing at the end of the day this system did save lives.

xv

This graphic shows once again the race discrepancies present during the pandemic,

although this time during a different time period. Between February and March of 2021, Blacks

were still the most affected by not being able to pay rent, but now they are followed by
Hispanic/Latino, followed by Asian and then White, with two or more races in between Black

and Hispanic.

Difficulty in Household Expenses

Similar to rent struggles, many adults and families also had struggles paying for

household expenses, or in other words daily items needed to function. These could be anything

from food, loans, and mortgages to car payments, medical fees, and more. 29% of American

adults, 63 million adults, reported that they struggled to pay household expenses in October of

2021; this was at a peak in December of 2020 at 38%. xvi This number rose most likely as a result

of people getting their jobs back and the governments relief packages.

Adults with children suffered more in this area as well, with 36 reporting financial

struggles related to household expenses when compared with 24% of adults without children.xvii

This is naturally a result of households with kids requiring more daily expenses than one without.

Additionally, adults with a disability also suffered higher rates of struggle. This is most likely a

result of them needed specialized living conditions in order to function at a regular level, and

also the struggle many disabled have to get a job, especially during a pandemic.

America’s Recovery

In spite of how drastic these numbers were in the middle of the pandemic, America is

actually almost back to normal. CNN reports that the U.S. is 94% back to normal.xviii Now this

normal index means back to what the U.S. was pre-Covid levels, not what it would have been
with no pandemic, but it still shows how far we have come. Unemployment rates have drastically

fallen, and many places are actually at a worker shortage.

Unfortunately, one of the groups most impacted by the pandemic that are small business

owners. Many small business owners were unable to keep their businesses afloat during the

pandemic, and probably will never be able to get them back. In California, 56% of small

business owners reported very negative side effects from the pandemic.xix Many government

programs that were meant to assist small business owners fell short, resulting in many firing

employees or even shutting down. Hopefully small businesses are able to recover now that

America is nearly back to 100%, but only time can truly tell.

The wealthiest countries of the world are going to recover nicely, but that cannot be said

of the poorest parts of the world.xx The CFA zone containing the majority of Africans poorest

countries for example, will continue to have devastating financial and health struggles even

today.xxi Americans should be grateful that they rest in the category of countries that will fully

recover, and once America does, they should help less fortunate countries to do the same.

Conclusion

Covid-19 has drastically changed the lives of everyone in the world. When looking

specifically at America, our workplaces and schools and colleges look different, people act

differently towards each other in public, politicians will continue to use the pandemic to further

their career, and millions will not forget the economic hardships that they have suffered. The

good news is that America is nearly out the other side, and will fully recover as a nation, and we

will be stronger because of it. The pandemic has revealed that certain groups suffer more that
others, particularly Black, Latino, those with disabilities, LGBTQ, and families with children in

times of pandemic. Many of these are a result of pre-existing conditions these groups face, while

others are practical reasons. Regardless, if a situation similar to Covid happens again these

groups will need special care to ensure they stay fed and housed. Covid has also revealed that

relief packages do work, but only in the short time; they do not address the underlying issues.

This is important information that America now knows in case anything like this happens again.

Americans should be able to rest easy knowing that if this ever happens again, we now know

what to do.
i
Yeyati, Eduardo Levy, and Federico Filippini. “Social and Economic Impact of Covid-19.”
Brookings, Brookings, 8 June 2021, https://www.brookings.edu/research/social-and-economic-
impact-of-covid-19/.
ii
Yeyati and Filippini, “Impact of Covid-19.”
iii
“Tracking the COVID-19 Economy's Effects on Food, Housing, and Employment Hardships.”
Center on Budget and Policy Priorities, 10 Feb. 2022, https://www.cbpp.org/research/poverty-
and-inequality/tracking-the-covid-19-economys-effects-on-food-housing-and.
iv
“Tracking the COVID-19 Economy's Effects”
v
“Tracking the COVID-19 Economy's Effects”
vi
Hardy, Bradley, and Trevon D. Logan. “Racial Economic Inequality amid the COVID-19
Crisis.” Brookings, Brookings, 9 Mar. 2022, https://www.brookings.edu/research/racial-
economic-inequality-amid-the-covid-19-crisis/.
vii
Kochhar, Rakesh. “Unemployment Rose Higher in Three Months of COVID-19 than It Did in
Two Years of the Great Recession.” Pew Research Center, Pew Research Center, 26 Aug. 2020,
https://www.pewresearch.org/fact-tank/2020/06/11/unemployment-rose-higher-in-three-months-
of-covid-19-than-it-did-in-two-years-of-the-great-recession/.
viii
Kochhar, “Unemployment in COVID-19.”
ix
Parker, Kim, et al. “Economic Fallout from Covid-19 Continues to Hit Lower-Income
Americans the Hardest.” Pew Research Center's Social & Demographic Trends Project, Pew
Research Center, 24 Sept. 2020,
https://www.pewresearch.org/social-trends/2020/09/24/economic-fallout-from-covid-19-
continues-to-hit-lower-income-americans-the-hardest/.
x
“Tracking the COVID-19 Economy's Effects”
xi
“Tracking the COVID-19 Economy's Effects”
xii
Kerrigan, Heather. “Evictions and Covid-19.” CQ Researcher by CQ Press, 2 Apr. 2021,
https://library.cqpress.com/cqresearcher/document.php?id=cqresrre2021040200.
xiii
Heather, “Evictions and Covid-19.”
xiv
Heather, “Evictions and Covid-19.”
xv
Heather, “Evictions and Covid-19.”
xvi

“Tracking the COVID-19 Economy's Effects”

xvii
“Tracking the COVID-19 Economy's Effects”
xviii
“Tracking America's Recovery.” CNN, Cable News Network, https://www.cnn.com/business/us-
economic-recovery-coronavirus.
xix
Person, et al. “The Economic Toll of Covid-19 on Small Business.” Public Policy Institute of
California, Public Policy Institute of California, 10 July 2021, https://www.ppic.org/blog/the-
economic-toll-of-covid-19-on-small-business/.
xx
Gill, Indermit, et al. “Getting out of the Coronavirus Economic Contraction.” Brookings,
Brookings, 9 Mar. 2022,
https://www.brookings.edu/blog/future-development/2022/02/16/getting-out-of-the-coronavirus-
economic-contraction/.
xxi
Zafar, Ali. “CFA Franc Zone: Economic Development and the Post-COVID Recovery.”
Brookings, Brookings, 9 Mar. 2022,
https://www.brookings.edu/blog/africa-in-focus/2021/08/05/cfa-franc-zone-economic-
development-and-the-post-covid-recovery/.