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.