Acute & Chronic Economic Considerations of COVID-19

and households without income to cover bills for housing, utilities, medical needs, and groceries. To add insult to injury, workers in the service-based sectors and others that require physical interaction with the public endured greater risk of contracting COVID-19 because their work environment necessitated consistent face-to-face interaction with potentially infected customers and coworkers.

For those who are able, such a situation is likely forcing them to burn through savings or accrue more debt in order to survive in the short term. According to MarketWatch, the bottom fifth by income do not have savings accounts. Middle-income households also struggle to save with the rising cost of living and debt. The days of maintaining enough savings to cover six months in expenses are behind us in an era of stagnant wages, student debt, climbing housing prices, and growing high-interest credit card debt. Debt will further rise as individuals and households rely on lines of credit and deferred payments to make ends meet throughout the pandemic. Since 2009 Financial Crisis, U.S. consumer debt has grown almost 20 percent, growing to a record $14 trillion. This consumer debt includes mortgage loans, automobile loans, student loans, credit card debt, home equity lines of credit, retail lines of credit, and personal loans. Job losses, lack of savings, and reliance on credit are shrinking gross income, disposable income, and discretionary spending. These shrinkages will bleed into long-term economic effects of COVID-19.

Factors for Post-Pandemic Economic Recovery
Once the pandemic cools and the country is able to slowly resume some semblance of normalcy, we will find our economy and its trends much changed. Risk averse behavior will likely arise in both consumers and businesses, exploiting an injurious economic symbiosis, and businesses will seek to minimize costs by reducing their labor needs in innovative ways. Even in sectors with labor needs, health risks and education costs may disincentive future workers.

From the consumer side, in order to cover bills through the duration of the pandemic, many will rely on credit and savings, if available, meaning that disposable income and discretionary spending will not rebound after the pandemic. As in the peri-pandemic period, workers in the service sectors (retail, food, tourism, entertainment, etc.), who already suffered critical economic losses, will probably be the most impacted. Workers will either compete for fewer available positions and hours or they will have to convert their skills to work in another industry with greater labor needs. Will that