The Virus Is Just Half the Battle

Jack Taggart

The Charter Features

5/4/2020

The COVID-19 pandemic hits close to home with social distancing measures and stay-at-home orders from many state governors. Many are under the impression that, while inconvenient, the changes to daily routines will leave with the virus. Another aspect of COVID-19 that is overlooked is the economic ill-effects that will likely be felt for a considerable time after the health dangers of the virus have passed. 

As of this writing, the stock market crash has resulted in the three worst drops in U.S. history, the biggest drop occurring on March 16, giving evidence that the economic impact could be a major effect of the new coronavirus, not the health issues it is causing. 

This becomes more evident upon examination when the current economic circumstances in comparison with past slumps in the stock market: the Dow Jones Industrial Average (DJIA) lost 35 percent of its value a week after hitting a record high in one week in March 2020. The drop occurred on March 16, with the DJIA falling 12.93 percent. For context, the crash that resulted in the Great Depression had a drop of 46.6 percent, with the largest single day decline at 12.8 percent. The more recent crash and recession of 2008 maxed at a total 53.7 percent decline, the worst single day drop 4.6 percent. Although the overall drop of the the DJIA has not reached recession status, it is quite possible with some experts saying that stay at home and social distancing orders may last a few more months, although single day drops are not likely to be much higher than those seen on March 16. 

Jerome Powell, Chair of the Federal Reserve stated in an address to the nation on April 9, “there is every reason to believe that the economic rebound, when it comes, can be robust. We entered this turbulent period on a strong economic footing, and that should help support the recovery.” 

Others, however, are not so confident. Chad Wynne, an ACA teacher who previously taught an economics class said  “I am hopeful that we can bounce back very quickly, but this crisis has exposed just how weak our economy is, and maybe we are going to need some radical changes or restructuring before we get back on our feet.” 

For better or for worse, the stock market will continue to fluctuate. 

Sources:

Federal Reserve Chair Powell on Coronavirus Pandemic and Monetary Policy. Federal Reserve Chair Jerome Powell delivered remarks on the coronavirus pandemic and its impact on monetary policy and the economy, 2020. 

www.c-span.org/video/?471076-1/federal-reserve-chair-powell-coronavirus-pandemic-monetary-policy.  Accessed 13 April.  2020.

Lin II, Rong Gong. “California won’t be lifting stay at home rules any time soon. Here’s why.” www.latimes.com/california/story/2020-04-08/california-coronavirus-trends Los Angeles Times, 8 Apr. 2020. Accessed Apr. 10.

Market Watch. Live information and changes, 2020.

www.marketwatch.com/investing/stock/live. Updated daily. 

The Balance. Latest DOW declines in terms of point, percentage drops, 2020 

www.thebalance.com/fundamentals-of-the-2020-market-crash-4799950.  Accessed Apr. 10.

Worldometer. Coronavirus Information, 2020.  

www.worldometers.info/coronavirus/?. Accessed Apr. 16.

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