Can Government Spending Save The Economy? Yes, But Does It Mean A Fast Recovery? By Kieran Khanna

What’s Happening Now?

 

According to the United Nations, the global pandemic has hurt many of the world’s economies regardless of income level. Many of which are already starting to feel a recession even though the virus hasn’t had any serious effect on them from a health standard. 

 

However, here in the US, things have taken a turn for the worst. From rising cases to small businesses closing down due to serious financial troubles, to over 50 million Americans filing for unemployment, we are in the worst case scenario when it comes to the COVID-19 pandemic. 

 

As months go by, over 1,000,000 Americans are losing their jobs, and we simply don’t know how long this crisis will last. 

 

In a podcast called The Daily by the New York Times, both of the speakers mentioned that the result of this pandemic is causing permanent economic damage. As a result, not every small business will recover from this crisis, and not a lot is being done to help support them and the American people who are out of work. 

 

How are both political parties responding? 

 

Both Democrats and Republicans have their own views for how and when reopening the country (and some states) should take place. But since the reopening, case numbers have risen up! States like Florida and Texas have been rising up to 15,000+ cases a day! 

 

There is not enough economic support to help small businesses who are struggling and if the president can’t step up and get the coronavirus under control, we can see a lot of permanent economic damage and changes in the near future. 

 

Another thing that’s a huge factor is how fast can we recover from this pandemic if many states have opened too early and colleges and universities are still finding solutions to continue to operate if they’re willing to let students come back to campus.  

 

President Trump has said before that he wants schools to open back up and operate fully, but teachers and students are afraid of going back to school due to concerns of catching and spreading the virus. 

 

There are two sides when it comes to the pandemic, one party is willing to allow people to die of COVID-19 and another is willing to take priority and protect one another, and that’s the main reason why the US has the most cases of COVID-19.

 

We are just one giant “hot-spot”. 

 

How The Economy Works

 

Here is how the economy works in the United States, money is borrowed from the people (taxes), that money goes to the government, the federal government “lends money” to people and small businesses. Congress however, spends money to help the economy and the people. 

 

It’s not just the US that’s suffering economically, many countries have experienced percentage losses regardless of level of income.  

 

When the economy is moving slowly, the government can make things go faster by taking money that isn’t doing much and put it into struggling businesses. Right now is a really good time to do just that because the government can borrow the money at incredibly low rates.  

 

Will some sectors of the economy be able to recover? 

 

No one really knows for sure what kinds of businesses will be able to recover faster, it really depends on how well we move from “stay at home to go back to work”. 

 

It’s pretty unlikely that we will all be back on our own two feet when we can go back to our normal lives. 

 

We will all still have to be able to social distance from each other and wear a mask wherever we go, and for some businesses that have large crowd spaces and many employees working, it plays a much bigger risk for those big businesses. 

 

Another big change would be if we should expect any permanent economic changes as a result of this pandemic, mostly structural changes, and that’s something we all have to be ready for.

 

How fast can the economy recover?

 

According to an article published by The Conversation, predictions on the COVID-19 pandemic on the world’s economy are being announced almost daily, and it is said that it could take at least 2 years for the economy to recover from this pandemic. 

 

If we look back at the influenza pandemic from 1918-1920, over 40 million people have died and there was an increase in poverty mainly in Sweden. 

 

Sweden had a serious decline in income sources from the capitol such as interest, dividends and many other factors that lasted until 1929. This resulted in a permanent decline that never recovered once the flu pandemic went away. 

 

There is no doubt that COVID-19 has made a huge impact on our economy, and its history shows us that if measures are still being ignored, there is a possibility that the economy could get much worse. 

 

So it really depends on the effect of the virus and how we as the human race are handling and following the CDC guidelines to ensure that we can recover from this pandemic. 

 

So Can Government spending save the economy? Yes, but does it mean a fast recovery? No, the best thing we can do is wear a mask and work together.

 

 If people don’t keep following the measures that are in place for the world we live in now, the longer it will take for the economy to recover from this historical pandemic.