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The Economic Impact of the Coronavirus Crisis

The Economic Impact of the Coronavirus Crisis

Ababil12 | Dreamstime.com

George Mentz By Monday, 20 April 2020 07:00 AM EDT Current | Bio | Archive

In the last 2 months, there are millions of people going on unemployment benefits and other applying for other coronavirus benefits.

The most serious impact of COVID-19 is the hospitalization and death of the most vulnerable people, including the disabled, elderly and those suffering from other pre-existing diseases.

The impact of COVID-19 will be roughly equivalent to the Swine flu pandemic of 2009-10, which infected 60 million Americans during the Obama administration, according to CDC data.

According to the CDC, the flu is very deadly.

Here are the deaths in recent years: (37,000) in 2010-11; (12,000) deaths 2011-12; (43,000) deaths 2012-13; (38,000) deaths 2012-13; (51,000) deaths 2014-15; (23,000) deaths 2015-16; (38,000) deaths 2016-17; (61,000) deaths 2017-18; (34,157) deaths 2018-19. The flu deaths during the Obama years are approximately 303,000 deaths for 8 years.

The difference between coronavirus, or COVID-19, and Ebola in 2014 is that they found an effective treatment to Ebola. The Ebola virus was far more deadly than coronavirus, but they found a way to save people.

The pros and cons of slow governors reopening of the state economies:

  • If governors slow the reopening of business, many won’t be able to buy food.
  • Slow governors may cause workers to lose their health insurance coverage.
  • Slow governors could force families to lose their home through foreclosure.
  • Slow governors are affecting the Social Security and Medicare benefits for 20 million workers and their spouses and children.

As for the business impact:

  • Many businesses in construction are operating fully nationwide.
  • Liquor related business is running fully.
  • Grocery stores are booming.
  • Pharmacies are running fully.
  • Hospitals are running fully.
  • Schools have moved primarily online, which is creating an e-learning boom.
  • Millions have been furloughed or terminated, reducing costs for businesses.
  • A transfer of healthcare costs from business to government is massive.
  • A transfer of unemployment costs to states is monumental.
  • Government state and federal workers are still getting paid.
  • Many companies are receiving 8 weeks of funding to pay employees.
  • Restaurants and food services are suffering but many have adapted to deliver, pick up, or sell products direct to major chains.

While the economy hit historic highs in early 2020, the country will reopen soon and hire back most of those employees who want to work and keep a job.

Here are some consequences:

  • Many departments will be reorganized for efficiency.
  • The 8-10 weeks has allowed many businesses to refocus their models or convert to online delivery.
  • The “stay in place” orders have allowed many businesses to refocus or retool their human capital.
  • Some inefficient workers will be moved to a position of more efficiency.
  • The federal government may even need to move essential employees out of high density population areas for safety and functionality concerns.
  • FANG related stocks are roaring higher.

The health concerns:

  • Obama did not shut anything down for any pandemic but his economy struggled for 8 years.
  • Flu deaths under the Obama administration: 303,000.
  • Approximately 2.7 million hospitalizations for flu under Obama.
  • Another 500,000 died under the Obama administration from opioid and tainted drugs.

Quantitative easing:

  • Over $1 trillion in stimulus money has hit Main Street.
  • Many businesses furloughed staff early so employees could get benefits.
  • Many companies avoided huge overhead hits by going to a skeleton crew immediately.
  • Insurance may cover many losses and business interruption.
  • The Fed lowered rates so easy money is available again to small business.
  • Billions of SBA loans have been made available.
  • State governments shut down too long will suffer the most.
  • State governments could bankrupt many small businesses.

COVID-19 will need viable treatments and vaccines to mitigate mass complications going forward. Amazingly, the initial Wuhan coronavirus impact on the U.S. will not be as large or deadly as the combined flu and Swine flu pandemics of the Obama era,

Many nations are opening, including Germany, Czech Republic, Austria, Italy, Spain Denmark and others. If the U.S. governors or mayors open too slowly, they could sabotage their state’s economy and tax revenues permanently.

In the end, the governors challenged President Trump’s authority to reopen, and it backfired. Trump put the reopening guidelines on the governors. On top of that, Nancy Pelosi and House Democrats and holding up SBA loans.

The average American has several debt obligations:

  • rent or mortgage
  • auto loan
  • student loans
  • credit card debt

Therefore, state governors are personally liable for getting the job done correctly, and if the governors are too slow, their constituents will make them pay politically for sabotaging their jobs, cars, homes, retirements, and their Social Security benefits.

George Mentz JD MBA CWM Chartered Wealth Manager ® is a licensed attorney and CEO of GAFM ® global education, which is an ISO 29990 Certified professional development company operating in over 50 nations. Mentz is an award-winning author and advisory board member to several companies around the world in education, charities, and FinTech Companies.

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In the last 2 months, there are millions of people going on unemployment benefits and other applying for other coronavirus benefits.
economic, impact, coronavirus, crisis
Monday, 20 April 2020 07:00 AM
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