The road to recovery: The “Great Pause” to the economy
Myki Dee Kim, Staff Writer
The COVID-19 pandemic has taken the world by storm as the virus continues to spread rapidly, affecting global populations in ways previously unthought of. Health care workers are being worked hours on end, students are no longer attending in-class lectures, and the general population is required to social distance to contain the spread of the virus. However, this virus is much more than a risk to health and wellbeing; it is also a risk to the economic stability of the world.
Heather Grob, Ph.D., Associate Professor of Business and Economics at Saint Martin’s University, shared her personal and professional opinion of the economic implications of the coronavirus. Grob stated that she is still processing the implications of COVID-19 and believes that results such as a great loss in lives is absolutely terrifying.
Grob noted that, “Within 4 weeks, 22 million workers in the U.S. applied for unemployment insurance… Amazingly, this COVID-19 virus, this infinitesimally small, invisible contagion has stripped away many of our pretenses and excesses, and it has made us see who suffers when adequate protections are not put in place. I can honestly say I don’t think I’ll ever witness something like this again. At least I hope not.”
Global unemployment continues to skyrocket as many around the world are faced with severe financial impacts. Countries have taken drastic measures to flatten the infection curve of the virus to minimize the spread. Due to the measures, many businesses and citizens are beginning to feel the impacts as many have had hours cut, been laid off, or released from their professions.
The Harvard Business Review noted that due to the financial instability of citizens, countries have stepped up in a variety of ways to help aid the economic implication of pandemic. Countries have halted mortgage and rent payments, invested in companies of all sizes to continue to pay their employees and cover expenses, and have created stimulus packages to benefit their economies. The United States alone passed a $2 trillion stimulus package to benefit U.S. taxpayers. The hope is that the respective aid helps minimize an economic downfall before and after the pandemic ceases.
Grob stated, “Some economists have correctly predicted that major natural disasters would have poor consequences for us, however, because we have such an imbalanced economy that does not adequately protect people who are vulnerable. Our health system is highly skewed toward profit-making and that leaves public health less resilient.”
Economists had predicted a slowing of the economy but nothing to this magnitude. The idea of social distancing is to prevent the spread of the virus and flatten the coronavirus curve around the world. Many countries and states have taken on their own version of social distancing, ranging from regional shelter in place orders, to complete countrywide lockdowns.
Harvard Business Review analysts noted that the social distancing measures are good for the health and wellbeing of citizens, but the actual window of social distancing success is extremely small. Countries with high outbreaks, such as China, Italy, and the United States, have missed the appropriate window for social distancing measures to be enacted causing drastic measures to be put in place to supplement and minimize.
Social distancing measures have created a disruption in the capital formation and active participation in the labor market. These extreme mandates were set up to protect the general public from the spread of the virus, but have instead begun to suffocate economic activity. Many wonder why the economic hit from the coronavirus has been so powerful. Simply put, this pandemic caused a shock in the economic flow of global markets. Economic growth rate quickly shifted from a positive to negative, and hit the world fast and hard, not allowing for countries and citizens to prepare for what was to come.
Grob believes that the United States economy was not well prepared for the magnitude of the shock in comparison to countries such as Norway, Finland, and South Korea.
Grob noted that “to stop a pandemic and the resulting economic crisis we needed a highly coordinated response across political boundaries and to have the political sway to encourage other countries to do the same. This requires coordinated federal and global policies.”
However, despite all the negativity surrounding the COVID-19 pandemic, Grob believes that there is hope for domestic and global economies to recover. Looking at the current state of the world from an environmental standpoint, there have been massive jumps in the healing of the environment, corresponding to a reduction in carbon emissions as wasteful energy use is decreased from its typical levels.
This virus is no doubt a massive hit to the economy, but Grob said that while the country will experience high levels of unemployment, these are hopefully temporary. The hope is that governments and private organizations continually act on ways to improve the economy to ensure impacts are not drawn out as what the United States saw during the Great Depression.
Currently, economists are calling the state of the economy the “Great Pause.” Many do not really know what this “Great Pause” means but it’s similar to pausing a film that one could stream on Netflix. Will pausing cause the film to continue where it left off? Or will it start back at the beginning? Or will you advance to the next episode in the series?
With all the talk of the coronavirus implications, many have been asking the “what’s next” question. Grob believes that this is the time to rethink our economy, who it works for, and who it works against. The pandemic has caused major inequities in the labor market focusing on the support of larger businesses over small local establishments.
Grob noted that, “As long as we get ahead of the virus and avoid a rebound of cases, the U.S. economy probably will bounce fairly quickly from intensive care to a more normal recession. The American economic system is incredibly powerful and productive, generating many jobs and a relatively high standard of living compared to other economies.”
However, we must be aware of the fiscal responsibilities and deficit spending that could reduce some discomfort from the pandemic’s effects.
On a more individual level, Grob emphasizes the importance of the health of family and the household to ensure the economy has the ability to bounce back not only financially, but mentally, physically, emotionally, and spiritually. In her view, ensuring the well-being of the community is the most effective way to reach the state of “normal” we are used to; potentially a better state of normal.
As a professor, Grob has always worried about the stresses and anxieties thrust upon young people, as well as the effects that isolation may have on one’s mental health. She encourages students to “take some time to reflect on their own, without using electronics, and to keep in mind that things will be okay. If you can, now is a chance to pray or meditate, to say hello to friends, greet strangers, to strike up a conversation (from a physical distance of course), to ask a local business owner or nonprofit how you can help. We know how precious individuals are how much we each crave interpersonal face to face communication with our families and friends, all our people in the neighborhood.”
She believes that the Saint Martin’s community as a whole is doing a wonderful job checking in on one another ranging from regular Zoom meetings to the Facebook group “Virtual Monk’s Bean.” This type of psychological regularity is important in maintaining some sort of schedule and structure in the craziness of current events. Grob noted that in times such as these, maintaining tradition and communication are imperative to the wellbeing of everyone involved.
The effects of the coronavirus COVID-19 pandemic are one that the world was not prepared for. It has affected the daily acts of life, health, communities, and the economic structure of the world. No one would have expected for a virus to affect the world’s economy as the coronavirus has in a short amount of time. The road to economic recovery may be long, but the world is in it together for the long haul. In the meantime, remember to check in on family and friends, take up a new hobby, support local businesses the best you can, and try to find light in your everyday life.
Disclaimer: In the print version of this article, it was stated that Heather Grob Ph.D. believed that the U.S. economy was well prepared for the COVID-19 economic crisis when compared to Norway, Finland, and South Korea. This was incorrect, as Grob stated that the U.S. economy was not prepared for the COVID-19 economic crisis, when compared to Norway, Finland, and South Korea.