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Lockdowns and shelter in place orders across the United States were supposed to be temporary measures, put into practice long enough to slow the spread of the pandemic without causing irreparable economic collapse. But now, as businesses shutter around the country and the globe, it is becoming clear that much longer-reaching consequences are at play.
The National Bureau of Economic Research found that, since the start of the pandemic, 100,000 businesses have permanently closed in the US alone. With those closures, millions of jobs for citizens desperately seeking an income evaporate into thin air.
In this video, we’re going to show you the scale of the next great depression, and all the important economic indicators you need to know. You’ll hear from health experts and economists, and get insight into findings from major institutions across the US who are studying and dealing with the current financial crisis.
Buckle up, because the data is grim. A recent GDP forecast released by the Federal Reserve Bank of Atlanta estimates an unprecedented drop of 42.8 percent for the three months through June.
US retail sales, factory output, and industrial production are all down–16.4, 13.7, and 11.2 percent respectively. The prolonged shutdown has generated a sort of economic freefall that is leaving few sectors unscathed.
Already, big names in retail that have been around for decades, like J.C. Penney, Victoria’s Secret, and Pier 1 Imports, are breaking the news of their economic woes. J.C. Penney said that it would soon be declaring bankruptcy, making it the largest retailer to do so thus far over the course of the pandemic. Meanwhile, Victoria’s Secret announced the closure of 250 brick and mortar stores across the US and Canada, and Pier 1 Imports is set to shut down entirely. Neiman Marcus and J. Crew also filed for bankruptcy.
And retailers aren’t the only ones suffering. Major car rental corporation, Hertz, said in April that the company was teetering on the edge of bankruptcy as well.
These bankruptcies are just the beginning, and Federal Reserve Chief Jay Powell has warned that a wave of similar events will follow. Although the Fed will attempt to support industries and minimize the destruction, there is only so much they can do.
The restaurant industry is one sector suffering particularly striking losses. In an interview with Bloomberg, CEO of Booking Holdings’ OpenTable and travel site Kayak Steve Hafner warned that, as a result of this depression, one in every four American restaurants will close down for good. According to the National Restaurant Association, its members suffered losses of $30 billion in March, and $50 billion in April. Because many of the establishments that are shuttering are smaller, independent organizations, they won’t even make the evening news.
Still, large businesses will not be spared. Ford, only days after triumphantly reopening some of their factories, pushed two back into temporary shutdown after a number of employees tested positive.
Shutdowns like these are a clear model for how difficult it will be for automakers and other industries to resume operations while dealing with the pandemic. Of course, this is what they will have to do for the foreseeable future to stay afloat, as there is no vaccine or other easy solution on the horizon.
“There are three things that have to all come together. You have to have a healthy workforce, a healthy supply chain and healthy demand,” said Kristin Dziczek, vice president of industry, labor, and economics at the Center for Automotive Research, a Michigan think tank. “It’s not just flip a switch and everything is as it was. It’s very complicated.”
With many Americans stuck at home, they are spending on groceries but little else, so even if Ford is producing products, the buyer’s market is drying up, with few people wanting to commit big sums to discretionary purchases like cars.
Retail sales dropped 17.2 percent in April, with clothing and accessories stores hurting the most, down 78.8 percent from March and 89.3 percent year-over-year in April.
Meanwhile, the commercial real estate industry is cause for serious concern. With renters unable to pay and property owners floundering from late checks, this sector will experience devastation on a scale that will make the 2008 financial crisis look like little more than a blip. Evidently, the toll trickles down from businesses to individuals. The number of Americans who have filed for unemployment benefits has surpassed 36 million, making this the worst unemployment crisis since the Great Depression. Even when that catastrophe was at its worst in 1933, only 15 million Americans were jobless, a number dwarfed in comparison to today’s collapse.
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