The United States and other countries that were hit hardest by the pandemic are severely falling in GDP, which is the amount of money a country makes in trade and their economic output. This research looks at the lasting effects of the pandemic on a country’s Gross Domestic Product and how government intervention through stimulus plans can rebuild their collapsing economy and help citizens return to normalcy. The pandemic has had lasting effects on the financial system of not just the US, but almost every economy, especially the top ten wealthiest nations. The impact of the pandemic on a global scale is examined in regard to the decline, the recovery, and the effect on the top ten countries by GDP. Government recovery plans have helped the US and other countries climb out of the depression even after the destruction caused by the pandemic. For instance, the stimulus package helped US businesses and citizens as a response and relief aid. Specifically, individuals received direct payments, and businesses were offered payroll protection to retain their workers.
In 2020 under the pandemic the GDP of the US hit a low not seen since the Great Depression. “Gross domestic product decreased 3.5% in 2020, the biggest drop since 1946. That followed 2.2% growth in 2019 and was the first annual decline in GDP since the 2007-09 Great Recession” (Bea.gov, 2021). Even though the GDP growth rate of the US was steady during 2019, the pandemic struck the economy down with a rapid 3.5% growth decline: a tremendous jolt on the US and its wealth. Even as the country is recovering, the economy of the US is far below what it was in 2019. “Current-dollar personal income decreased $339.7 billion in the fourth quarter, compared with a decrease of $541.5 billion in the third quarter” (Bea.gov, 2021). The citizens of the USA also faced harsh challenges as the pandemic struck especially in the GDP per capita income. GDP per capita is the gross domestic product of a country divided by its population. The US has the highest GDP in the world, but since the pandemic lowered the wealth of the country, many people were earning less and therefore lowered the GDP per capita. The pandemic has had a massive impact on the economy of the US and will continue to do so even when it fully recovers.
The US and other countries are recovering from the virus through government intervention. Assistance from the government such as the stimulus package, a plan put in place to help the struggling economy, has helped the US climb from the depression. “The US Congress gave final approval to a massive $1.9 trillion COVID relief plan that will have far-reaching effects on millions of Americans” (Chan, 2021). This stimulus package will hugely help the US economy’s growth. $1.9 trillion is more than the GDP of Brazil and almost as much as that of Italy. The package is one step closer to full recovery for the US “The new $1.9 trillion package adds to that, pushing America’s fiscal response above 27 percent of GDP, according to Elgin’s calculations. That’s nearly four times the share implemented in response to the 2008 financial crisis —and second only to Japan in terms of coronavirus response” (Taylor, 2021). The stimulus package, which includes funding for education, transportation, jobs, child and family support, buildings and utilities, as well as tax credits, helped the USA to better respond to the pandemic. The 2008 financial crisis didn’t lower the GDP of the country as much as the pandemic did, and now, only because of the package, the response to the current economic downfall is 4 times better. Regarding financial responsibility, this helped the USA become one of the best responding countries to the virus’s social and economic toll. This is important especially since the US was one of the worst responding countries in controlling the virus. While the pandemic did have a massive effect on the economy of the USA, the United States is quickly growing again at a 4% growth rate and a 33% growth rate in the 4th and 3rd quarters respectively. In both quarters, the growth of the economy has increased faster than it was shrinking in 2020. The US is headed toward recovery, recuperating from the virus, meaning that while the pandemic severely lowered the economy, the US is growing again and faster than it was before.
Globally, the pandemic caused the economies of the top ten richest countries by GDP to hit an all-time low. Among the hardest hit in that financial pitfall were the US, the UK, India, Brazil, France, Italy, and Germany. Surprisingly, China’s economy was not heavily affected. These world superpowers shuffled around in the top ten when we look at the world economy list in 2019 compared to 2020. “Brazil went from the ninth largest economy in 2019 to the 12th largest last year, becoming the only country that fell out of the top 10 ranking” (Lee, 2021). Brazil was one of the countries that were most affected by the virus. It fell out of the top ten list by GDP and was instead replaced by South Korea. Brazil fell into 12th place just behind Russia. “India, which became the world’s fifth largest economy in 2019, slipped to sixth place behind the UK last year” (Lee, 2021). India is another country that was heavily affected by the virus. And while the UK was also strongly afflicted by the virus, India’s recent surge in cases caused the economy to quickly decrease. Like the US, the pandemic has disrupted India’s growth in economy and population while delaying the recent boom that India has been experiencing in its Gross Domestic Product. “We see that in some countries the economic downturn has indeed been extremely severe: In Spain, the UK and Tunisia, the output of the economy in the second quarter was more than 20% smaller than in the same period last year. This is 4 to 5 times larger than any other quarterly fall on record for these countries” (Lee, 2021). As shown, the pandemic’s effect on the GDP of countries is global and not just on the US The circumstance of many countries is the same as it is in the US, with the pandemic causing a drop in GDP that had not been seen in a long time or ever. The pandemic decreased the GDP output for multiple countries to a much lower level than in the previous year, some even being under 20%, which is a major change to many of the top economies and a percentage not insignificant when considered in the context of a single year.
The pandemic has had large-scale effects on the GDP of the US and the economy of many other countries around the globe. Ample research and data show and prove the effect of the pandemic on the economy and purchasing power of a country. However, while the pandemic has had a huge toll on the economy and citizens in each country, the world is slowly returning to normal. As this happens, the economy of most countries will return to pre-pandemic levels and so will day-to-day life. Data proving the recovery of the United States is rapidly changing as the US starts to grow again. With help from the government, we are slowly turning back to the world we had before.
Bureau of Economic Analysis (2021). News Release Gross Domestic Product, 4th Quarter and Year 2020 (Advance Estimate), January 28.
Chan, V. (2021). The $1.9 trillion stimulus package could see the US economy outpace China’s for the first time in 45 years. Fortune, March 11.
Lee, Y.N. (2021). Here are the 10 biggest economies in the world – before the pandemic vs. now. CNBC, April 20.
Taylor, A. (2021). How the $1.9 trillion US stimulus package compares with other countries’ coronavirus spending. Washington Post, April 5.