The economic impact of the COVID-19 pandemic in the United States has been widely disruptive, adversely affecting travel, financial markets, employment, shipping, and other industries. The impacts can be attributed not just to government intervention to contain the virus (including at the federal and state level), but also to consumer and business behavior to reduce exposure to and spread of the deadly virus.
Real GDP contracted in 2020 by 3.5%, the first contraction since the 2008 financial crisis. Millions of workers were dislocated from their jobs, leading to multiple weeks of record shattering numbers of unemployment insurance applications. Consumer and retail activity contracted, with many businesses (especially restaurants) closing. Many businesses and offices transitioned to remote work to avoid the spread of COVID-19 at the office. Congress passed several pieces of legislation, such as the American Rescue Plan Act of 2021 to provide stimulus to mitigate the effect of workplace closures and income losses. The Federal Reserve reduced the federal funds rate target to nearly zero and introduced several liquidity facilities to keep financial markets functioning and to provide stimulus. In late 2021, inflation began to increase to levels not seen since the 1980s.
Recovery from the recession began relatively quickly, with the recession only lasting one quarter according to the NBER. As of 2022, the unemployment rate reached its pre-pandemic levels - nevertheless, in many key aspects and industries, the U.S. economy has not completely recovered from the COVID-19 pandemic.
A growing digital gap emerged in the United States following the pandemic, despite non-digital enterprises being more dynamic than in the European Union. In the United States, 48% of enterprises that were non-digital before to the pandemic began investing in digital technologies. 64% of firms that had previously implemented advanced digital technology also increased their investment in digitalisation. In the United States, 20% of jobs were found within firms that have not digitally transformed. According to a recent survey, these are called "sleepwalking firms", and are also more likely to pay lower wages and to create lower employment. These firms were also less likely to train their employees throughout the COVID-19 outbreak.
Overview In 2020, the U.S. GDP contracted at a 3.5% annualized rate. It was the biggest contraction since 1946 and the first contraction since 2009.
The United States Census Bureau's Household Pulse Survey published weekly statistics of the effects of the pandemic on Americans' lives. For week 12 (July 16–21), 51.1% of respondents reported a loss of employment income since March 13, 2020, 12.1% reported food scarcity, 40.1% delayed getting medical care in the past four weeks, and 26.5% reported housing insecurity.
Statistical summary The following table illustrates the impact of the pandemic on key economic measures. February 2020 represented the pre-crisis level for most variables, with the S&P 500 stock market index (a leading indicator) falling from its February 19 peak. From February through June, the number of persons with jobs was down 14.6 million. The U.S. also added $3.1 trillion to the public debt in just 4 months.
Variable Feb Mar Apr May June July August Jobs, level (000s) 152,463 151,090 130,303 133,002 137,802 139,582 140,914 Jobs, monthly change (000s) 251 −1,373 −20,787 2,699 4,800 1,780 1,371 Unemployment rate % 3.5% 4.4% 14.7% 13.3% 11.1% 10.2% 8.4% Number unemployed (millions) 5.8 7.1 23.1 21.0 17.8 16.3 13.6 Employment to population ratio %, age 25–54 80.5% 79.6% 69.7% 71.4% 73.5% 73.8% 75.3% Inflation rate % (CPI-All) 2.3% 1.5% 0.4% 0.2% 0.7% 1.0% TBD Stock market S&P 500 (avg. level) 3,277 2,652 2,762 2,920 3,105 3,208 3,392Debt held by public ($ trillion) 17.4 17.7 19.1 19.9 20.5 20.6 20.8 In October 2021, however, annual consumer price inflation reached 6.2%, the biggest rise in 31 years.
Impact on individuals
Employment effects
Government statistics
In the February 2020 jobs report, which reflected the employment situation before lockdowns began, 1.28 million Americans were classed as "permanent job losers". In August, that number was at 3.41 million, and in September it rose to 3.75 million. "Temporary layoffs", meanwhile, decreased, suggesting that some job losses originally understood as "temporary" had now become permanent.
On May 8, 2020, the Bureau of Labor Statistics reported that 20.5 million nonfarm jobs were lost and the unemployment rate rose to 14.7 percent in April. This followed reports of weekly initial claims for unemployment insurance that increased from a typical level of around 200,000 per week through early March, to 3.3 million the week of March 21, a peak of 6.9 million (March 28), and declines each week thereafter to 3.0 million the week of May 9. A total of 36.5 million filed for unemployment insurance from March 21 to May 9. The Congressional Budget Office estimated that costs for unemployment insurance claims were $49 billion in April 2020, versus $3 billion in April 2019. An estimated $27 billion of the increase was due to the $600/week increase in unemployment benefits due to the CARES Act.
On May 20, 2021, the Labor Department reported that there had been only 444,000 unemployment claims during the previous week, the lowest number since the beginning of the pandemic.
The United States depended on direct payments and loans to help individuals and businesses, regardless of whether jobs were retained. As a result, while aggregate hours worked decreased by around 15% in the United States and the European Union, unemployment increased significantly in the United States. However, in the United States, most firms that implemented digital technology were better able to avert worker reductions than non-digital firms.
Surveys and studies In a paper published in early May 2020, the Urban Institute estimated that about 25 million people would lose their employer-provided health insurance if the unemployment rate were to rise to 20%. Of these, they speculated, 12 million would obtain Medicaid coverage, 6 million would find coverage privately, and 7 million would become uninsured.
By summer 2020, nearly two-thirds of households where an adult had contracted COVID-19 had also experienced job loss or a reduction in hours. Likewise, "serious financial problems" were reported by nearly two-thirds of those households, whereas such problems were reported by just under half of U.S. households overall, according to a survey by NPR, the Robert Wood Johnson Foundation, and the T.H. Chan School of Public Health at Harvard University that was conducted in July and August.
The impact of COVID-19 on employment varied widely across industries. For example, a study found that transportation workers were 20.6% more likely to be unemployed compared to those in other sectors, with specific sub-sectors like taxi drivers facing particularly severe job losses.
Eviction and foreclosure
The economic impact and mass unemployment caused by the COVID-19 pandemic raised fears of a mass eviction crisis, with an analysis by the Aspen Institute indicating between 19 and 23 million, or 1 in 5 renters, were at risk for eviction by the end of September 2020. A separate July 2021 United States Census Bureau survey projects 7 million households unable to pay rent and at risk of eviction, with a potential 3 million eviction filings in the next two months.
The federal CARES Act provided for a 120-day moratorium on evictions for federally backed properties, beginning on March 27 when the act was signed, and lasting til July 24 on eviction filings for rental units in properties that participate in federal assistance programs, or have a federally backed mortgage or multifamily mortgage loan. According to one estimate, this eviction moratorium covered 28% of all rental units in the United States; however, there were no enforcement mechanisms provided. A number of cities and states also passed rulings suspending evictions for varying amounts of time. When these moratoria ended in June and July 2020, evictions increased in many states and jurisdictions. A new nationwide moratorium was announced by the Centers for Disease Control began on September 1 which banned evictions for most renters for the rest of 2020.
The CARES Act also provided protection from foreclosure until August 31, 2020, for homeowners with federally backed mortgages. The CARES Act also allows mortgage holders the right to a mortgage forbearance for up to 180 days, with another 180 days on request. Several states also passed foreclosure moratoriums as well.
The United States Census Bureau uses their Household Pulse Survey to gather data on both monthly rent and mortgage payments during the pandemic. For the week of July 16–21, 2020, 8,251,079 homeowners of owner-occupied housing units did not make their mortgage payment on time and 4,473,321 deferred their payments, out of 148,685,473 surveyed. Similarly, 13,339,515 renters did not pay last month's rent, and 1,504,864 deferred their rent, out of 73,065,587 responses.
Homelessness had already been rising before the pandemic, with a 2% increase in the number of homeless people between January 2019 and January 2020.
Home sales People who could afford to buy homes enjoyed the lowest mortgage interest rates since at least 1971. Home sales rose and showed a trend of people who could work from home moving out of expensive, large cities into smaller, lower-cost cities where they could afford larger homes with more on-site amenities. States like California and New York saw an exodus as a result of the pandemic. Housing prices rose amid a building boom as lumber futures reached an all-time high.
Food insecurity
Food insecurity across the United States rose significantly in 2020. Feeding America predicts that an additional 17 million people could become food insecure because of the pandemic, bringing the total to more than 54 million people in the country.
Before COVID-19, food insecurity was still prevalent, impacting 37 million people in the U.S. Since food insecurity and poor nutrition are "associated with chronic diseases that put people at higher risk for the more severe complications of COVID-19, the food access crisis has exacerbated the already glaring disparities in health outcomes for vulnerable people, including low-income people, children, older adults, and [undocumented immigrants living in the United States]." While the factors underlying racial and ethnic disparities are complex and multidimensional, disparities in food security have played a crucial role in the health inequities that have been witnessed during the pandemic. The ability to eat healthy, nutritious food depends on an individual's circumstances and environment.
The pandemic left millions of people in the U.S. at-risk when it comes to nutrition and overall health status. The pandemic complicated food insecurity among children, older adults, and undocumented immigrants. Feeding America stated that the estimated number of food-insecure kids could jump from 11 million to an estimated 18 million. Additionally, many children in the U.S. rely on free meals for sustenance. While food banks and pantries amped up services, the temporary disruption in these services could have devastating long-term consequences. Many seniors live on low and fixed incomes, resulting in decreased access to adequate nutrition and support services. Seniors are also particularly vulnerable to the devastating effects of COVID-19, leading many to avoid unnecessary visits to food pantries and health clinics. Undocumented immigrants are arguably the most vulnerable to food insecurity because they are ineligible for many government assistance programs. Even before the pandemic, 1 in 4 experienced food insecurity.