Question

Briefly describe how the coronavirus has led to the changes in the economy over time, relating it to levels of shut down over time in the states.

Answer 1

An epidemiological threat such as the new coronavirus which causes the COVID-19 disease can have disruptive economic effects. It can interrupt the worldwide supply of products, making it more difficult for US businesses to fill orders. It may also slow down jobs in affected countries, reducing labor supply on one end and increasing demand for U.S. goods and services on the other.

Disruptions to global supply chains are among the coronavirus' clearest results. Looking closer at global supply chains, major disruptions have already occurred, with the list of producers outside China being forced to decrease production at their plants increasing longer each day.

As noted earlier, China has shut down factories as a preventive measure in areas impacted by the virus, causing supply chain disruptions and impacting migrant workers' mobility and job opportunities in the near term.Not only can the virus affect production, but certain parts of the U.S. economy will also suffer market declines and significant revenue reductions because of the overall economic impacts. Two distinct results need to be considered. Second, people will buy less of those products and services because they fear future exposure to the virus. You may be less likely to fly or go out to dinner, for example. The effect is that hotels and air travel will feel a real pinch. There already tends to be a declining market for the food and beverage industries.

When businesses are forced to close, employees are likely to earn less wages than they would otherwise have earned and earn no compensation in some situations. As a result, those workers would have to spend less, again reducing overall demand. A decrease in demand following a supply shock is a one-two punch that can compress more economic activity although the scale of these effects is largely uncertain.

This may impact companies, households and investors in the financial market. Businesses will hang on to investments because they don't know what's going on with supply chains, as well as their domestic and foreign customers. It's not clear when and how far the virus will spread worldwide. This makes it difficult or even impossible to determine the impact of the above mentioned disruptions in the supply chain and demand. But if these results are hard to measure, companies won't know whether they can proceed with expected or even new investments. Even, any decline in U.S. business expenditure will come after U.S. investment spending has already fallen

Disruptions in the supply chain, contractions in demand and global economic instability arise against the backdrop of many companies and households straining under vast volumes of debt. Even if the economy is declining, this debt must be repaid. This continuing debt servicing also means less money to spend on companies and families as their wages go down. High debt rates would worsen the virus' economic fallout.