What Do the Coronavirus Headlines Mean for the Future of Business?
usiness leaders and owners want answers and a sense of control in what feels like an endless economic tailspin worldwide. Let’s take a look at some of the facts before the change and break down some of the popular headlines as we navigate the unknown future before us.
A Recession Was Coming Before Coronavirus
Prior to this outbreak, the United States had experienced 128 consecutive months of growth and a 50-year low unemployment rate. In addition, the stock market was in the midst of a long bull market. However, there were a growing number of indicators that a global recession was looming in the next nine to 15 months. Indeed, the coronavirus catapulted the world economy towards a recession faster than it would have happened naturally. Predictions of a negative 10 – 25% GDP for the second quarter of the year has resulted in governments around the world acting and many, such as the United States, have moved aggressively on health and economic issues.
Understanding 20 Percent Unemployment
Here in the United States, we are being bombarded with headlines about the potential for a short-term unemployment rate of 20 percent. The national average has hovered in three to four percent range prior to the virus, so this would be a massive spike. However, we need to give this number some context and rationality. While the outlook is certainly changing by the moment, this sharp increase will likely be a temporary pain point. A conservative estimate is this double-digit figure will be in play for approximately eight to 12 weeks, as normal life resumes once again. The $2 Trillion financial package, known as the CARES act was signed into law by President Trump on Friday, March 27th and is expected to help combat the significant health and economic fallout from the COVID-19 pandemic.
Is The $2 Trillion Stimulus Package Enough to Help Businesses Survive?
At the heart of the package for businesses is the $500 billion lending program, which will allow the Treasury Department to provide loans, loan guarantees and other investments. $350 billion will provide crucial loans to small businesses to prevent layoffs and closures while workers must stay home to slow the outbreak. $150 billion will funnel to state, local and tribal governments with $30 billion set aside for state and educational institutions. $45 billion is for disaster relief, and $25 billion will be used for transit programs.
In addition, the $2 trillion package will provide approximately $140 billion of funds to support health care workers and facilities. Targeting these businesses and subsequently, American employees will allow for companies large and small to keep their overhead costs afloat and keep an essential workforce for a few months as the economy gets back on its feet. The key to success will be the rapid and effective implementation of these funding programs.
We Have a History of Resilience and We Will Rise Again
Yes, we are facing what seems like an insurmountable challenge. However, we can take solace in looking back at defining moments in history to see Americans always come together to lift each other up. Our country has survived world wars, the Great Depression, an oil embargo, the bursting of the dot com bubble, 9/11 and countless natural disasters, and yet, always rises to the challenge.
Looking specifically at the attacks of 9/11, let us recall how we persevered. At the time, the terrorist attacks caused a then record-setting 7.1% one-day decline in the stock market. An estimated $1.4 trillion in value was lost during the first five days of trading after 9/11. Similar downward spirals hit the travel, tourism, hospitality, entertainment and financial services sectors, as our country was gripped with temporary panic and uncertainty. No one knew what lay ahead. Yet, not more than a month later, we saw the Dow Jones, the Nasdaq and the S&P return to pre-9/11 price levels, and the economy began to grow again. Yes, life was changed forever, but we were stronger as a result of going through 9/11.
This pandemic is not the end of the story for America, but the start of a new chapter. We will work past these difficulties united in the common goal of taking care of one another and relaunching our economy. We are smarter, faster and more adept than ever before. We must take this opportunity to grow our digital skillsets and learn to navigate this new world online until we can come together again in person. Focus less on speculative headlines and more on what you can do and the resources you do have as we look out together into the new frontier. The future remains bright for all of us.