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This past week, the U.S. has topped China and Italy in total confirmed cases of COVID-19, officially making the U.S. the leader in confirmed cases during the global outbreak. In the midst of all of the chaos, the Dow Jones Industrial Average plummeted nearly 3,000 points, the largest point drop in history, but since then major stock indexes have rebounded following the Senate’s unanimous approval of a nearly $2 trillion economic stimulus package. The implications that the COVID-19 lockdown has for the U.S. and global economy is troubling but as the U.S.’ recovering stock market shows, it is also temporary. COVID-19 will have lasting impacts in the form of changing expectations of governments in providing support, but its current negative effects don’t have to outlast the virus as long as efforts are made to keep people afloat during this time. 

Short economic downturns will be unavoidable in countries affected by COVID-19 and this is partly due to the disturbance of global supply chains. China is the world’s largest exporter, with many U.S. and global companies alike shipping raw materials over and final goods being shipped back. Now that companies are not able to receive shipments from China and soon Italy, this will trigger additional supply restrictions. On Feb. 2, Hyundai idled all seven of their plants in South Korea for lack of parts from Chinese suppliers. The limited amount of raw materials will reinforce demand reductions and workers will be dropped because there is simply not enough supply to produce anything. As a result of this depressed activity, the United Nations projected that foreign direct investment flows could fall between 5% and 15%, the lowest it has been since the 2008 to 2009 global financial crisis. 

In addition, demand and spending will drastically fall as people avoid leaving their houses and face restrictions imposed to contain the virus. Tourism and travel-related industries will be among the hardest hit as social distancing continues to be encouraged. The International Air Transport Association predicted that COVID-19 could cost global air carriers between $63 billion and $113 billion in revenue in 2020. Other industries face similar fates with the international film market projected to lose over $5 billion in lower box office sales. Small businesses, restaurants, sporting events and other services will also face significant disruption due to the loss of foot traffic. Even industries less reliant on high social interaction, such as agriculture, are likely to be faced with issues as demand wavers.  

The combination of a decrease in supply and demand will inevitably lead to large-scale layoffs or reduced hours. The reduction and loss of income only contributes to the fall in demand since people will have less money to spend. Many people are already experiencing the effects of COVID-19, with U.S. weekly jobless claims for the week of March 21 totaling a record high 3.28 million, which is up 281,000 from the previous week. 

Despite the bleak future for the U.S. and other economies alike, there is still a chance for a quick recovery depending on how long the ongoing situation continues. A $2.2 trillion economic stimulus package passed unanimously in the Senate and was later approved by the House of Representatives. On Friday, March 27, President Donald Trump signed the bill into law, the bill includes: a one-time check of up to $1,200 to qualifying individuals plus $500 per child, $500 billion in loans to struggling businesses, $377 billion in loans and grants for small businesses, $150 billion for local, state and tribal governments and $130 billion for hospitals. The package also stops foreclosures and evictions temporarily on properties where the federal government backs the mortgage, pauses federal student loan payments for six months along with waived interest fees and provides more than $25 billion in new money for food assistance programs.

In theory, the proposed package provides minimal but at least some temporary relief needed to live and operate during this time where income and demand is low. Yet, there still remains several gaping holes in the plan, millions of immigrant households will not receive COVID-19 relief money. In order to receive the check, a person must have a valid Social Security number or green card. If a tax-filer’s spouse or child can’t provide either, the whole household is denied a check. This is an enormous oversight considering immigrants make up a large portion of our workforce and are on the front lines in the health care sector as well. 

The bill will also provide an additional $500 per child to parents but the child must be under the age of 17 at the end of the tax year. Therefore, college students and high school seniors who parents have claimed as a dependent but are over the age of 16 will not be receiving the additional $500 or the $1,200 relief check. The lack of consideration for older dependents is especially concerning for university students across the nation who are being put out of work but still have expenses like tuition and rent to pay for. 

As a short-term solution, the stimulus package could be sufficient enough in softening the impacts of COVID-19 on the U.S., but there must be the inclusion of a wider demographic of people. In the end, what will determine whether or not economies see lasting impact is how long the U.S. and other countries remain in this state. Until the virus itself is contained, COVID-19 will continue to pose a risk to the economy, especially if the situation is dragged on for longer than expected. If it comes to that, the U.S. government and other global governments will have to come up with a more substantial way to provide support.