This article was also published for Clutch City Control Room. With the NBA set to resume in less than a week, it felt it was an appropriate time to assess the impact the COVID-19 pandemic […]
More than a month has passed since I initially wrote about the coronavirus pandemic and its impact on the NBA and the Houston Rockets. That month has felt like five years, as the world has dramatically been impacted by COVID-19. Countries, states and cities have imposed lock-downs as citizens have been forced to self-quarantine while businesses around the world have closed their doors.
Just as Americans became focused on flattening the curve as it relates to COVID-19, they need to think about doing the same for the U.S. economy.
In my first article, I argued the economic impact would have a far greater and lasting impact than the virus itself. While social distancing measures have been successful in slowing the spread of coronavirus – the number of potential deaths in the United States has been downwardly revised from a staggering 2.2 million to 200,000 to 60,000 – it has come at a steep economic cost not seen since the Great Depression. The U.S. GDP is expected to contract, on an annualized basis, an unfathomable 30% in the second quarter. The U.S.’ annual GDP is approximately $21 trillion, so this would result in a loss of $7 trillion, or $1.75 trillion per quarter. The $2 trillion stimulus package passed by Congress certainly helps in offsetting this loss, but there may be another round necessary, as it could take companies years to regain pre-COVID 19 performance and employment levels. More devastating is the 22 million Americans that have filed for unemployment in less than a month, putting the United States’ unemployment rate at 17.5%, nearly double of the 2008 Great Recession’s unemployment peak of 10%. Most major retailers that have been forced to close have furloughed as much as 90% of their staff, and the great fear is that the longer coronavirus-imposed shutdowns occurs, the more these furloughed employees could eventually be permanently laid off. There have been studies that have found unemployment has an adverse impact on one’s mental health, an intangible repercussion that simply can’t be quantified neatly in a chart. Just as Americans became focused on flattening the curve as it relates to COVID-19, they need to think about doing the same for the U.S. economy.
This time last week, it seemed nearly incomprehensible that the NBA season could be suspended. The coronavirus pandemic was less real here in the United States, with only mumblings that games could be played without fans in attendance. And yet the signs were all there. Japan’s professional baseball league, defined by an atmosphere more akin to an American college football game than an MLB game, was beginning to hold games in empty stadiums. Countries around the world had been limiting travel, with Italy closing its borders all together. In the United States, travel had been restricted to particular hotspots Italy and South Korea, and the signs of the first community spread of COVID-19 were found in California.
The league and its owners convened this past Wednesday afternoon to discuss options on how to approach the season in light of coronavirus. Some owners suggested playing games without fans in attendance, while others, including Houston Rockets owner Tilman Fertitta, preferred the league suspend the season for a few weeks. Then, on Wednesday night, moments before tipoff, a game between the Utah Jazz and Oklahoma City Thunder was abruptly cancelled, an unprecedented move made by the league. It would come immediately apparent that Rudy Gobert, the center for the Utah Jazz, was diagnosed with COVID-19.
While the spread of COVID-19 is becoming worse, its economic impact is as well, should not be taken lightly in any respect, and arguably will have much more lasting consequences.
The sequence of events set off a firestorm, which was particularly fueled by a video of Gobert being flippant about the virus two days prior. The league, now having its “Patient Zero”, had no choice but suspend the season. Players and media members at the game were held in quarantine throughout the night as testing was performed on each and every one to ensure no one else had the virus. The following day, it came apparent that Gobert’s teammate, Donovan Mitchell, was diagnosed with COVID-19, which undoubtedly created tension between the two players. With the NBA suspending its season, several other sports leagues followed suit, including the NHL and MLS, while one of the marque sporting events of March, NCAA’s March Madness, was cancelled outright.