The physical space of the MSK Library is scheduled to close to visitors on Friday, May 17, 2024. Please visit this guide for more information.
The physical space of the MSK Library is scheduled to close to visitors on Friday, May 17, 2024. Please visit this guide for more information.
Since the world was already struggling with economic stagnation in 2019, the start of the COVID-19 pandemic in February 2020 sent the global economy into crisis, and by late 2020 every advanced economy in the world had fallen into a recession. Global stock markets experienced their worst crash since 1987, and the Group of 20 (G20) economies fell 3.4% in the first three months of 2020. An estimated 400 million jobs were lost in the first half of 2020, with global income earnings dropping 10%.
The impact of COVID-19 varied by sector, with areas such as travel (tourism and transportation), entertainment, manufacturing, and retail hit hardest. Other areas, such as restaurants were able to adapt to stay-at-home orders by shifting to take-out and delivery. In the United States, an initiative known as the "Great American Takeout" called on people under quarantine to support local restaurants each Tuesday by ordering takeout for curbside pickup or using food delivery services.
One area which benefited tremendously from the pandemic was e-commerce, which surged during 2020 and 2021, due to stay-at-home orders and the public generally not risking in-person shopping.
On February 20, 2020 stock markets across the world suddenly crashed, due to the instability and uncertainty of COVID-19. That week stock markets declined the most since the 2007-2008 financial crisisThe global financial crash officially ended on April 7, 2020, though the United States did not recover to January 2020 levels until November 2020. During the nearly 7 week crash, there were three severe drops in the global market.
Prior to opening on the morning of Monday, March 9, 2020, the Dow Jones Industrial Average futures market experienced a 1,300-point drop due to the pandemic and oil prices. As the markets opened, the Dow plummeted a massive 1,800 points, 500 points more than was predicted. Even with trading curbs (trading suspended for 15 minutes) enacted, by the end of the day the Dow Jones lost more than 2,000 points (7.79%), considered to be "the biggest ever fall in intra-day trading." Financial markets around the world tanked.
Three days after Black Monday (I), a second stock market crash occurred. On Thursday, March 12, 2020, in response the pandemic and the 30-day EU travel ban instituted by then President Trump, US stock markets (including the Dow Jones and the S&P 500) suffered their greatest single-day percentage fall since the 1987 stock market crash. European and Asian markets also suffered significant losses.
After a weekend of governments around the world announcing financial stimulus packages, on the morning of Monday, March 16, 2020, the US market opened and immediately the Dow tumbled more than 1,000 points and the S&P dropped 5%, triggering another trading circuit breaker. By the end of the day, all three major US stock markets (DOW, NASDAQ, and S&P) had fallen by 12–13%, with the Dow eclipsing the one-day drop record set on March 12th, and the trading curb being activated at the beginning of trading for the third time in a single week.
At the beginning of the pandemic, the United States actually saw a small decrease in inflation, likely due to less demand for consumer goods and services. However, in 2021 inflation surged to historic levels. In past pandemics, as well as in wartime, the United States has experienced short bouts of inflation. The reasons behind this pandemic inflation are several: base effects, supply chain disruptions, and resurgence of demand.
Base effects occur when an initial month experiences a unusually low or high growth rate. Between February and April 2020, average prices fell 0.5% before beginning to rise again in May 2020. This unusually large price decrease early in the pandemic made April 2020 a low base. Due to the suddenness and scale of this decline, inflation growth rates were distorted due to this base effect. This issue with base effects is that they distort our perception and understanding of prices and inflation in real-time.
The disruptions to the supply chain made many base goods more difficult to acquire, meaning the production of end products becomes more expensive. This in turn leads to companies passing the increased costs on to consumers.
As individuals and society returns to a more normal level of activity, the increase in demand for many services and activities that were either unavailable or less consumed due to the pandemic, may lead to those services and activities to increase their prices during the pandemic and now in recovery the public is seeing these increased prices.
In early 2020 global supply chains were disrupted as countries implemented lockdowns and stay-at-home orders, including suspending manufacturing. This led to shortages on COVID-19 related supplies, such as the necessary supplies for COVID-19 testing (reagents, swabs), personal protective equipment (masks, face shields), hand sanitizer, as well as medical supplies such as ventilators and oxygen.
It also led to shortages for many basic necessities, including toilet paper and other paper products, aluminum, and many other consumer products that experienced significant shifts in demand due to the pandemic (cleaning supplies, canned goods, computers, bicycles, baking yeast, sewing machines, and even televisions and video game consoles).
Most businesses expected supply chains to recover quickly by 2021, once stay-at-home orders were eased, but due to inequalities in vaccine access in lower income countries, as well as the Delta variant in 2021 and the Omicron variants in 2022, global manufacturing and production did not recover, even as wealthier countries such as the U.S. and Europe moved to their prior consumer patterns.
Many economists attribute the continued supply chain issues to "lean manufacturing", which requires a delicate balance between raw goods and finished outputs, in order to reduce costs and minimize products sitting in warehouses. When the pandemic shut down manufacturing in early 2020, it set off a chain reaction of disruption. This was especially apparent in sectors such as medical supplies, where manufacturing could not keep up with surging demand.
The surge in production affected shipping, where many U.S. container ports were unable to clear their shipyards quickly enough to keep up with the surge in production, which in turn contributed to and exacerbated the supply chain crisis. By mid-2021 U.S. ports were so inundated with inbound cargo, and decreased staffing, that many container ships sat in port for weeks on end, waiting to be unloaded. Once container ships were unloaded though, the problems didn't resolve. Due to labor shortages in the rail and trucking industry, containers sat at shipyards awaiting trains or trucks to deliver their goods across the country.
In 2022, the supply chain crisis was a major contributing factor in the infant formula shortage, and a large number of drug shortages that are still ongoing. The disruptions triggered by the pandemic will likely continue into the foreseeable future, as the world struggles with extreme weather caused by climate change, geopolitical uncertainty and unrest, energy costs and shortages, rising cost of living, and labor shortages and strikes.
In 2019, before the pandemic even began, more than 35 million Americans (including 11 million children), were food insecure, and that number rose to 45 million Americans and 15 million children in 2020, with continued food insecurity into 2021, according to projections from Feeding America.
In 2021, New York's 15th Congressional District (which includes the Southwest Bronx and the South Bronx) was the most food insecure congressional district in the U.S. with nearly one quarter of the district and nearly 40% of children considered food insecure.
The COVID-19 pandemic increased global food insecurity in almost every country by reducing incomes and disrupting food supply chains. The situation worsened in 2022, when Russia invaded Ukraine, further disrupting food supply chains, since Ukraine produces almost one third of the world's supply of wheat.
According to the World Food Programme, over 800 million people were going hungry at the beginning of 2022 (prior to the war in Ukraine) and the number of severely food insecure doubled from 135 million to 276 million in the first two years of the pandemic. The Food and Agriculture Organization (FAO) of the United Nations projected that in 2022 over 43 million people in 38 countries are at risk of falling into famine or famine-like conditions without humanitarian relief. The countries most at risk of famine were: Ethiopia, Somalia, South Sudan, Afghanistan, and Yemen.
The International Labour Organization stated on April 7, 2020 that it predicted a 6.7% loss of job hours globally in the second quarter of 2020, equivalent to 195 million full-time jobs. They also estimated that 30 million jobs were lost in the first quarter alone, compared to 25 million during the Great Recession. In March and April 2020, a record 13 million and 9.3 million workers (8.6% and 7.2%) were laid off in the U.S. Unfortunately, the effects of the pandemic on employment lasted significantly longer than initially expected.
Globally, an estimated 400 million jobs were lost in the first half of 2020. Since many higher-income earners were able to shift their jobs to work from home, the pandemic impacted lower-wage earners more significantly, further increasing income inequality.
According to a 2022 study by the National Endowment for the Arts, in the first year of the COVID-19 pandemic, few industries were hit harder than the performing arts. Artists and performing arts companies were sectors with the steepest declines in the U.S. economy in 2020 (along with oil drilling and air transportation). After adjusting for inflation, the economic values produced by performing arts (including festivals), fell by nearly 73% between 2019 and 2020.
Motion picture and video production lost the greatest number of workers in 2020—136,000. Employment by performing arts presenters and performing arts companies fell by 56,000 and 50,000 workers, respectively.
However, the overall blow to the arts and entertainment industry was protected in part by the strong growth of web publishing and streaming services, which grew by 14.3% in 2020.
New York City’s world-renowned arts, entertainment and recreation sector saw the largest decline among all sectors in the city’s economy due to the COVID-19 pandemic, as employment declined by 66 percent over a one-year period ending in December 2020, according to a February 2021 report by the New York State Comptroller's office.
The COVID crisis has led to a collapse in international travel. According to the World Tourism Organization,
International tourism experienced a 5% increase in 2021, 22 million more international tourist arrivals (overnight visitors) compared to 2020 (427 million versus 405 million). However, international arrivals were still 71% below the pre-pandemic year of 2019.
As a result, export revenues from international tourism plunged 63% in 2020 and 61% in 2021 (real terms) which amounts to a combined loss of US$ 2.1 trillion in this two-year period.
However, not only tourism-dependent countries were economically impacted. In the United States, Hawaii saw one in every six jobs vanish by August. In Florida, where tourism accounts for up to 15 percent of the state’s revenue, officials said it will take up to three years for the industry to recover.
Among G20 countries, the hospitality and travel sectors make up 10 percent of employment and 9.5 percent of GDP on average, with the GDP share reaching 14 percent or more in Italy, Mexico, and Spain. A six-month disruption to activity could directly reduce GDP between 2.5 percent and 3.5 percent across all G20 countries, according to a recent IMF paper.