(Tiểu Luận) Analyze America’s Economic During And Aftercovid-19 Pandemic Via Economic Indicators..pdf

Knowing the changes in factors that make up an economy such as GDP growth, unemployment rates, and consumer spending can help control risks, and the government can establish some measure

TRƯỜNG ĐẠI HỌC KINH TẾ - ĐẠI HỌC ĐÀ NẴNG

BỘ MÔN NHẬP MÔN KINH DOANH

GROUP ASSIGNMENT REPORT

MODULE: INTRODUCTION OF BUSINESS

TOPIC:

ANALYZE AMERICA’S ECONOMIC DURING AND AFTER COVID-19 PANDEMIC VIA ECONOMIC INDICATORS.

GROUP 2: Members: Phạm Thị Lan Anh

Trần Ngọc Ánh Trương Châu Hân Trần Lê Thảo Huyền Nguyễn Thị Thùy Linh Nguyễn Phạm Ánh Ngọc

CLASS: 49K25.1

Đà Nẵng, 2024.

The COVID-19 pandemic hit the United States in early 2020, changing the landscape of the nation The first confirmed case emerged in Washington state on the 20th of January - a 35-year-old woman who returned to Everett after she was believed to become infected with Covid-19 while in Wuhan, and then it spread widely throughout the country By March, the World Health Organization declared

a global pandemic The US government responded quickly with a national emergency declaration, leading to lockdowns, travel restrictions, and social distancing measures to slow the spread of the virus

This highly contagious disease overwhelmed healthcare systems during peak infection periods, straining resources and personnel The economic impact was significant, with businesses forced to close or operate at reduced capacity, leading

to job losses and financial hardship Social life was also disrupted by school closures, travel restrictions, and the need for social distancing, creating a sense of isolation for many

Analyzing economic indicators to predict future development is always a core issue for the economies of countries worldwide, especially during and after the COVID-19 pandemic Knowing the changes in factors that make up an economy such as GDP growth, unemployment rates, and consumer spending can help control risks, and the government can establish some measures to stimulus economy From assessing the impact of the pandemic, governments can promptly introduce fiscal policies and loan packages to support enterprises and workers, then evaluate the effectiveness of the applied strategy In the pandemic period, the world economy is likely to face an economic crisis during the epidemic situation, so analysis of economic indicators will help navigate the economy through challenges, creating a premise for sustainable development

MỤC LỤC

I Impact of COVID-19 on the Economy:

1 GDP (Gross Domestic Product):

Gross domestic Product is the market value of all final products and services that are produced within the border of a country in a specific period of time

1.1 Overview of GDP trends of US before, during, and after the pandemic:

Before the COVID-19 pandemic, the GDP growth rate of the US grew stably from 1960 to 2019 according to the report table of the US GDP growth rate In1

2020 there was the COVID-19 pandemic breakout in the first quarter of this year which means many workers lost their jobs and businesses had to be closed For this reason, the GDP growth rate in the second quarter of 2020 decreased significantly

Felix Richter,2023 However, after the pandemic, which is about 4 years until now the GDP growth level has recovered remarkably

1.2 Changes in GDP growth rates:

At the time before the COVID-19 hit the US GDP growth rate, there was a firm rise between 1960 and 2019 in the GDP growth rate of the US, and in 2019 the GDP growth rate of the US was 2,29% based on the data from “US GDP Growth Rate 1961-2024”of Macrotrends When the first case of Covid-19 appeared in the first quarter of 2020, the GDP growth rate of US collapse significantly by about 10% in compared with the fourth quarter of 2019 After that, the GDP in US hit a lowest point at -28% in the second-quarter of 2020 Surprisingly, in the next quarter the US GDP re-increased spectacularly to reach a peak at 34,8% following the data

of United States GDP Growth Rate from Trading Economics, and then the US GDP growth rate continued to go up remarkably to exceed its pre-pandemic level and in the second quarter of 2021 the US GDP grew at a rate of 6.5( Jeffry

1Hoavic 2021 “GDP Của Hoa Kỳ.” Số Liệu Kinh Tế September 24

<https://solieukinhte.com/gdp-cua-hoa-ky/.>

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Bartash,2021 ).In short, GDP growth rate in the US experienced various fluctuations due to the coronavirus pandemic

2 Unemployment Rate:

2.1 Impact of the pandemic on employment levels

The employment levels of many countries, including the United States have been affected considerably by the coronavirus pandemic (Annabel Walker,2021 ) In March of 2020, because of lockdowns and social distancing measures the US economy had to be shut down, and in many businesses only pivotal personnel could continue to go to work to restrict the spread of the pandemic ( Lexi Lonas,2022.) Meanwhile, there was a more serious effect on certain industries than others such as the leisure, and hospitality sectors including restaurants, bars, amusement parks, and hotels (Candice Norwood,2020) Moreover, commuting inner city and traveling around the world have been significantly limited due to flight cancelation and the reduction in capacity (Joseph B Sobieralski,2020) Besides, job losses also happened due to low wages and low working hours during the pandemic, especially

in leisure and hospitality sectors (Elise Gould and Melat Kassa,2021) In conclusion, the COVID-19 has impact seriously the employment levels in the US

2.2 Changes in unemployment rates across different sectors

The leisure and Hospitality sector:

Before the hard hit of the COVID-19 pandemic, the unemployment rate in this sector in the US was stable at about 4% to 7%, which is quiet low Hence, in February 2020 the unemployment level rocketed to 39.3% due to the disease with complicated progression but from this level, the unemployment rate went down impressively to 14.7% in October 2020 and then continued to decrease to a reasonable level of 6.6% in February 2022 following the data from U.S Bureau of Labor Statistics

Transportation and warehousing sector:

At the outset of 2020 which means when the first case of COVID-19 was found on 25 January in Seattle, Washington (th Alan J Stein,2020), the unemployment level of the transportation and warehousing sector was still at a low level which about 3.8% Subsequently, the unemployment rate suddenly increased enormously to 15,7% in July 2020 which was about 4,7% higher than the total unemployment rate in the US at that time Following the unemployment peak, the percentage of unemployment fortunately recovered promptly to decline to an acceptable level of 9% at the beginning of 2021 as stated by the data from the Bureau of Labor Statistics

Construction sectors:

After reaching a peak of 27,1% in the unemployment rate of the construction industry in February 2010, there was a downward tendency in the unemployment rate However, from the second quarter of 2020, this unemployment rate reached a peak of 16,6% due to the Coronavirus Disease Afterward, the loss-job rate fell intensively and stabilized around 3% and 7% as described in graph from the FRED-economic date

Manufacturing sectors:

In the manufacturing industry, the unemployment rate has a similar trend to the construction sector Specifically, there was a gradual reduction in the manufacturing sector’s unemployment rate from 2010 to the end of 2019 After a slight growth in the first quarter of 2020, the next quarter which was when the disease was at its peak, the job-loss percentage witnessed a massive leap to 13,2%

in April 2020 In the months, from this impressive high level, the manufacturing unemployment rate began to hit a trough of 1,8% and then hovered around 2% according to statistics from the FRED-economic date

To sum up, the Coronavirus Disease has had a significant impact on many industries especially the leisure and hospitality sectors with 39,3% in the unemployment rate in February 2020

3 Consumer Spending

The breakout of the COVID-19 pandemic has created a wave of decrease in consumer spending in the USA in 2020 At the beginning of 2020, the lockdown order was enacted in the US and most of the countries in the world causing a diminish in all aspects of the world, from economic, social, education, entertainment, … According to a report from the US BUREAU OF LABOUR STATISTICS, there has been a decrease of 9,8 percent in consumer spending in quarter two of 2020 when compared to the same period in 2019 At the beginning2

of 2020, the lockdown order was enacted in US and most of the country in the world caused a diminish in all of the aspect of the world

3.1 Shifts in consumer behavior during the pandemic

The first Covid - 19 case was detected in the US on January 21, 2020 and quickly spread across the states But the government was not aware of this situation, the Trump administration continued to encourage the implementation of reopening measures to stimulate the economy; however, as a consequence, the situation worsened, and the economy experienced a significant decline (Wikimedia) There was a drop by 29% immediately after the first wave of the pandemic, this drop was even larger than the financial crisis in 2007 - 2009 (Ali AbdullHussein and colleges,

2022) Overall, this declines due to the buying behavior of consumers, they spent3 more for normal goods and health - care goods and less for inferior goods In the

2 Changes to consumer expenditures during the COVID-19 pandemic (n.d.)

Retrieved from

https://www.bls.gov/opub/ted/2022/changes-to-consumer-

expenditures-during-the-covid-19-pandemic.htm#:~:text=After%20the%20COVID-19%20pandemic,consumers%20had%20begun%20to%20adapt

lockdown time, the demand for online buying has increased a lot and some e-commerce giants like Amazon experienced a period of breaking sales records Compared to last year, Amazon's net profit was up to 84% and annual revenue up 38% to $386 billion (Shelly E Kohan, 2021)4

3.2 Recovery of consumer spending post-pandemic

The post-covid 19 economic recovery in the United States is generally a significant step forward, but uneven across sectors After the pandemic, customers 5

in the US seem to have spent more for durable goods rather than non-durable goods and services (U.S Bureau of Economic Analysis) The 2020 data shows that Americans spent around $12,5 trillion for goods and services, and this is more than half a trillion less than last year With the growth of population of about 2,5 million people per year, it will take until 2023 for American residents to return to pre-pandemic spending levels (Thomas Mitterling and colleges, 2020) 6

4 Business investment

4.1 Effects of economic uncertainty on business investment

3 AbdulHussein, A., Cozzarin, B., & Dimitrov, S (2022) Changes in consumer

spending behavior during the COVID-19 pandemic across product categories

Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9660125/

4 Kohan, S E (2021) Amazon’s Net Profit Soars 84% With Sales Hitting $386

Billion Retrieved from

https://www.forbes.com/sites/shelleykohan/2021/02/02/amazons-net-profit-soars-84-with-sales-hitting-386-billion/?sh=65e2cb4a1334

5 Federal Reserve Economic Data: Your trusted data source since 1991 (n.d.)

Retrieved from

https://fredblog.stlouisfed.org/2022/02/has-consumption-spending-on-services-recovered/

6 Kelsey Wu, M T., Eswar Prasad, C S., Brooks, R., & Daniel S Hamilton, J P Q

(2022) The decline and recovery of consumer spending in the US Retrieved from

https://www.brookings.edu/articles/the-decline-and-recovery-of-consumer-spending-in-the-us/

Under the impact of the pandemic, businesses in the US in the first half of 2020 had a significant decline, but were able to recover after only a short time (Daniel Bachman, 2022) Businesses tend to invest in short-term projects instead of long-7

term projects, facilitates or new equipment The pandemic also brought some difficulties for businesses in accessing investment loans, especially for small and medium enterprises (Alexander W Bartik, 2020) 8

4.2 Government policies to stimulate investment

The Federal Reserve System (FED) has introduced a number of measures to stimulate economic recovery such as reducing interest rates, loans and asset purchases as well as changing some regulations (Gabe Alpert, 2023) Also in this9

period, one of the measures of FED to support the economy and financial market included lowering interest rates to near zero and establishing the lending facilities to support the enterprises, (Alexandria White, 2021) 10

III Government Responses and Economic Policies

7 Bachman, D (2023) Is the writing on the wall for buildings? Business investment

since COVID-19 Retrieved from

https://www2.deloitte.com/us/en/insights/economy/spotlight/business-investment-trends-post-covid.html

8 Bartik, A W., Bertrand, M., Cullen, Z., Glaeser, E L., Luca, M., & Stanton, C

(2020) M Proceedings of the National Academy of Sciences , M 117 (30), 17656–17666

doi:10.1073/pnas.2006991117

9 Alpert, G (n.d.) U.S COVID-19 Stimulus and Relief Retrieved from

https://www.investopedia.com/government-stimulus-efforts-to-fight-the-covid-19-crisis-4799723

10 White, A (2021) Fed rate cut lowers interest rates to near zero-but how much

are you really saving on your credit card debt? Retrieved from

https://www.cnbc.com/select/impact-of-fed-rate-cut-amid-coronavirus-concerns/

The COVID-19 pandemic has caused a global economic shock wave, sending the US economy into recession Businesses closed, unemployment skyrocketed and economic activity plummeted In response, the US government embarked on unprecedented fiscal and monetary policy interventions to mitigate the crisis and spur recovery Assess and dive into the pandemic's impact on the U.S economy, analyze the government's multifaceted response, and explore the lingering uncertainties shaping the path forward

The pandemic's initial attack on the American economy was swift and brutal Social distancing and lockdown measures have paralyzed economic activity across various sectors, especially tourism, hospitality and retail Gross domestic product (GDP), the total value of goods and services produced, fell a staggering 3.5% in the first quarter of 2020, marking the sharpest decline since the Great Depression The unemployment rate spiked to a staggering 14.7% in April 2020, 20.5 millions people lost their jobs Consumer spending, the driving force of the 11

US economy, plummeted as anxiety soared

A Fiscal Policy:

1 Overview of government spending measures during the pandemic

To deal with this economic disaster, the US government launched a multi-pronged attack The cornerstone of its fiscal response was the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) , the largest economic relief 12

package in US history and marking the third and largest major legislative initiative

to address COVID-19 to date It includes several health-related provisions focused

on the outbreak in the United States, including paid sick leave, coronavirus testing coverage, nutritional assistance, and programs and another effort The CARES Act also expanded unemployment insurance benefits, offering a lifeline to those who lost their jobs In addition, the Paycheck Protection Program (PPP) provided forgivable loans to small businesses, helping them retain employees and weather the storm

Besides financial stimulus, the Federal Reserve deployed its monetary 13

policy arsenal It cutted interest rates near zero (the funds rate to a range of 0% to 0.25%) making borrowing cheaper and encouraging spending and investment Moreover, the Fed executed a program of Quantitative Easing (QE) and shifted the objective of QE to supporting the economy The Fed doubled its speed of tapering,

11 U.S unemployment rate soars to 14.7 percent, the worst since the Depression era (2020)

< https://www.washingtonpost.com/business/2020/05/08/april-2020-jobs-report/ >

12The Coronavirus Aid, Relief, and Economic Security Act: Summary of Key Health Provisions (2020) < https://www.kff.org/coronavirus-covid-19/issue-brief/the-coronavirus-aid-relief-and-economic-security-act-summary-of-key-health-provisions/>

13How did the FED support the US economy and financial markets < https://www.brookings.edu/articles/fed-response-to-covid19/ >