It’s not surprising that the pandemic caused a 33% increase in the country’s national mortality rate in April, 2020. What most people don’t know is the economic impact of the pandemic.
The highest contraction in US economic history was due to the coronavirus pandemic. Although there has been some improvement, many still feel like it is a recession.
Keep reading to hear Roger Scott’s exclusive insights on the impacts of the pandemic on the US Economy.
A decline in the Gross Domestic Product (GDP)
According to data from the commerce department, the GDP dropped to 9.5% in 2020’s second quarter compared to the three previous months. Furthermore, a 32.9% annual decline in GDP was the result of an unprecedented economic crash.
Also, according to new data, the worst economic damage happened in April, the most terrible period of the economy’s closure due to the pandemic. And Roger Scott says that despite businesses opening in May/ June 2021, the employment situation has stagnated and some losses are still visible.
Rise in unemployment
Some businesses were unable to survive the temporary economic closure. Following this event, the decrease in the employment-to-population ratio in the USA became huge.
In April 2020, the national decline was 9.9 for every 100 people. Meaning that fewer people were working than was anticipated before the pandemic.
Roger Scott, Head Trader at WealthPress, stated that the aviation and hotel sector is key to economic recovery.
Low Interest rates
Realizing the economic impact of the pandemic, the Federal Reserve decided to lower the federal funds rate to 0% and 0.25% on March 15, 2020. They also planned to maintain the benchmark rate near zero until 2023 to ensure that consumers and banks have access to low-interest rates.
In the same vein, the fixed rate for a 30-year mortgage was 2.71% in December 2020, the lowest level in nearly 50 years. And, although it increased slightly to 3.18 % in April 2021, the rates were still below 3 % as of August 2021.
The Stock Market Crash and Rebound
WealthPress head trader Roger Scott kicked off with this truth: “At the beginning of 2020, the stock market set new records”. However, panicked investors caused the 2020 stock market crash shortly after President Trump declared a national emergency.
The Dow Jones Industrial Average (DJIA) of 23,553.22 on March 11 officially ended the 11-year bull markets that began March 5, 2009, and brought down U.S. stocks to a bear market. Interestingly, the DJIA shot up to 29,950.44 on November 16, 2020, thanks to investors, and a climax of 30,000 points was achieved for the first time, eight days later.
The Oil Price Collapse
The WealthPress head trader also explained that the global pandemic had a direct impact on global oil demand. The price of oil was at $64 per barrel in January 2020. Unfortunately, as pandemic effects grew more severe, global oil prices plummeted to $19 a barrel.
Nevertheless, the pandemic’s relapse caused prices to rise later in the year, but they did not close again at $64 until March 2021.