It all started with the fact that in the United States there are more than a million cases of coronavirus, and as a result, unemployment increased, many companies went bankrupt. The government has responded with direct payments to the population and unprecedented support for the country’s economy, to help people survive in United States during pandemic in 2020.
The US government has distributed more than $ 2 trillion to the population, alleviating a difficult situation for many Americans, but some experts doubt it will be good for the country’s economy. Economic experts say that direct payments will not help, but can, on the contrary, greatly harm the US economy, since inflation will increase, the dollar will depreciate and may even lose its leading role in the global financial system.
Direct payments, otherwise called helicopter money, are an extreme measure to stimulate the economy. In the spring of the pandemic, the US Federal Reserve printed more than $ 2 trillion and distributed it to citizens to consume, buy the things they need, and pay for the services they need. People get easy money and spend it, thus paying for labor and goods from suppliers, so that in the end the economy gets an incentive.
At the same time, economists understand that this measure is not entirely due to government’s love for citizens. In this case, American banks predicted at the beginning of the year the largest fall for the country’s economy and an explosive rise in unemployment. According to their estimates, unemployment will rise to 50%, and the fall in GDP will be 40%. This is practically a disaster for the economy, as the explosive spread of the virus led to a decrease in consumption and then to a decrease in the number of jobs.
On the other hand, economic experts are confident that such helicopter distribution of money is unlikely to be able to support demand and consumer spending, despite all the good intentions of the authorities. The problem is that in a crisis situation, a person is usually not inclined to spend money on trifles and excesses, because he fears a worsening of the situation. Citizens are more likely to choose to save money. Thus, money ends up in the pockets, and only a small part of it reaches the companies.
Some experts believe that there is no point in handing out money while the epidemic continues. These amounts will not be enough to spend them on something significant and thereby support demand and, in general, it is not clear where these funds will go. It would be nice if these funds were spent in the leisure field most affected by the coronavirus. But restaurants and bars are closed, public events are prohibited, and there is no tourism.
But another part of the experts insists that the situation in the country has become so difficult, and the amount of money distributed is so small that it will hardly be possible to postpone it, since it is already not enough for everyday needs. Companies do not invest, banks stop lending, sales fall, staff have to be cut, and then because of unemployment people try to save money, and as a result, companies are selling less and less.
Be that as it may, ordinary Americans and their children just want to eat every day, so they are less concerned with more distant prospects than their daily bread during the rampant coronavirus pandemic. In addition, the benefits will help ordinary Americans get financial assistance in the form of personal loans, which will not only help them survive in difficult times when people are trying to understand how to survive in the United States during pandemic in 2020, but will also have a positive impact on the credit system and on the country’s economy as a whole.
Unemployment Rate And Fall Of GDP Comparable To Great Depression
America has set economic records that it did not want. After the first payment of benefits, the poverty rate in the United States fell from almost 11% in the first two months of 2020 to 8.6% in April-May. It cannot be said unequivocally that poverty was reduced by injection of trillions, but according to the US Department of Commerce, the economy in the midst of the pandemic in 2020 lost a record almost a third of GDP in the second quarter, and the unemployment rate exceeded the threshold of 14%.
Even during the Great Depression, there was no such rapid decline in the US gross domestic product in a short period. The number of unemployed also peaked for the first time since the 1930s.
According to Bloomberg, reffered to a study by the Urban Institute, everything leads to the fact that more than 12 million Americans may find themselves below the poverty line. Poverty in the country will grow to 12% in six months of 2020. If at least one person in a family has lost their job due to the crisis, then in the second half of 2020 the poverty level will exceed 15%.
The situation will be most difficult in Hispanic and African American families, where the poverty rate is expected to rise to 20%. The most difficult situation is predicted for families of color, but in the face of poverty, everyone is equal and it will be difficult for all US households, regardless of their ethnic and social origin or skin color.
1.4 million people applied for unemployment benefits last week. Looking at the results of the study, this number can be called unprecedented. We have never seen such a number of Americans who are looking for ways to survive in the United States during a pandemic in 2020 and need government assistance before.
If the authorities do not resume direct payments, more than 12 million Americans will find themselves destitute, and the question of how to survive in the United States during a pandemic in 2020 will become even more pressing for tens of millions of American families. But the US administration and GOP senators are skeptical about the re-distribution of money. Thanks to the benefits, the locked-home Americans received more than they earned before the pandemic. At the same time, benefits will serve as a source of income for Americans, which will serve as a guarantee for lenders and so, needy citizens can receive additional financial support.
How the Government is Going to Solve the Problem
Experts see a repetition of incentive payments and a new unemployment benefit as the only way out of the situation. Also, they are demanding to expand SNAP, which is a monthly food stamp subsidy. The Urban Institute believes that it would be most effective to assign direct payments of $ 1,200 per person or $ 2,400 to each family. Otherwise, the country may face a national economic crush, but the government is in no hurry to make such a decision.
In late July, Republicans announced a trillion-dollar plan that will prop up the economy. The party wants to cut weekly benefits, but increase targeted payments to families. The US administration and Republican senators considered the unemployment benefit payments excessive. White House chief of staff Mark Meadows said that many citizens, sitting at home in quarantine, received more than they earned before the crisis.
The United States government has indeed committed unprecedented amounts of money to support citizens. They have allocated $ 257 billion for benefits. In April-May, citizens received another $ 140 billion in unemployment insurance. Because of this, people’s incomes increased by 10% in April.
Considering that the $ 600 additional benefit has boosted the incomes of some Americans over the salaries they received before the SOVID-19 pandemic, thanks to these trillion-dollar pumpings of helicopter money. But unfortunately, such helicopter scattering of trillions of dollars can only bring a temporary positive effect.
People need to be motivated to return to work. Therefore, the US administration wants to abandon the addition of $ 600 to weekly benefits and pay Americans 70% of their salaries. They helped bolster the economy and consumer demand. But the pandemic is not over yet and many Americans remain unemployed.
Despite the challenges facing the nation, the US economy needs our spending. The benefits paid by the government, although quite small, have another big advantage, as they can help us not only feed and survive in the United States during pandemic in 2020, but also serve as a basis for a positive decision by lenders when you need financial support.
You have a chance to get approval for a personal loan if the lender understands that you will have the ability to return it. In some cases, an online personal loan can prevents staying your kids hungry or sometimes even can save your life. In addition, now you can apply for such financial support, meeting the minimum requirements, without leaving your home and getting your money in just one day.
If you are one of those lucky ones who have a job but have begun to cover your credit card balances in this situation, then you can use the possibilities of debt consolidation to make it easier and cheaper to manage your debt with a personal loan. Plus, as long as you keep your credit active and in good status, your options remain broad. If your credit score has dropped recently due to interrupted credit history, then this would be a great option to raise it.