When Covid-19 was reported in the country at the beginning of the year and the country began taking precautionary measures by temporarily closing down most economic activities in March, most people, including economists assumed that it would be only a temporary business interruption. But from the look of things now, it has lasted more than temporary. The pandemic shock is slowly becoming our new norm, despite it being a nightmare in nature.
According to data from experts and researchers, the country’s economy shrank at a 32.9% annual rate between April and June as the nation faced the humiliation by lockdowns and disruptions on all operations during the pandemic. The rate has been termed as the deepest decline since the U.S government began keeping records in 1947, and three times more severe than the previous record of 10% set in 1958. The fall was majorly contributed by the decline in spending on services like healthcare. Economists had projected that the sharpest drop would be experienced in Q2, with a recovery thereafter. But as the virus cases in the country soared higher, with some areas re-imposing restrictions on operations, the hope of rebounding is slowly diminishing.
With the ongoing economic shock from the pandemic, the U.S central bank has come out again to vow to continue protecting the U.S economy amid the rising Covid-19 cases and worries about economic growth. The Federal Reserve maintained the interest rates on hold at near zero on July 29, declaring the rates would remain that way for as long as necessary.
According to a Fed statement, there are signs of an economic rebound. However, it warned that the long term path of the economy was bound up with the path of the virus.
“Following sharp declines, economic activity and employment have picked up somewhat in recent months but remain well below their levels at the beginning of the year,” Fed’s policymakers said in a recent meeting. All members of the Fed’s policy-setting committee voted to maintain the target range for short-term interest rates at between 0%-0.25%, where it has been since March 15 when the pandemic was enrooting in the country.
Elsewhere, despite the rising worries concerning the economy, the president holds his position that his plans are on track. “I created the greatest economy we’ve ever had. And now we’re creating it again,” he said on July 11, before leaving for Florida. A day earlier, he told a group of Hispanic leaders that he had launched “the fastest economic comeback in history.” Indeed the economy recorded a regain of 7.5 million jobs in May and June, which was faster than what experts had anticipated. However, that number represents just one-third of the number of jobs lost to the pandemic.
The American Healthcare System
Since the onset of the pandemic, even the most vocal critic of the American health care system has all the reasons to appreciate the fighting spirit and heroism of every frontline worker and patient fighting the system’s most severe consequences. The reversing effects brought by the pandemic brings us to the less-urgent but still a critical question of what the American health care system might look like after the pandemic.
The pandemic exposed the underlying issues in the American healthcare system. One of the things we must highly consider is to expand the concept of the meaning of a “health care provider.” The pandemic created a sudden increase in demand for health care due to the surge in hospitalization and diagnostic testing. Also, since the families of hospitalized patients are not allowed to visit their loved ones, the role of each health care provider is expanding.
The mismatch between patient needs and the capacity of the provider represents one of the most pervasive inadequacies the U.S health care system is facing. To compensate for these inadequacies, several things had to change. Physicians and nurses who were previously dedicated to elective treatments are now caring for Covid-19 patients, non-clinical staff members are now helping with patient triage, fourth-year medical students were allowed to graduate early and join the front lines, as the restrictions on healthcare workforce were eased in late March. The crisis should be an eye-opener to the regulators of the system that important aspects of health care can be provided by those without advanced medical degrees.
Also, there is a need for an entirely new model of health insurance. The current health crisis has unearthed yet another inadequacy of our current system of health insurance. The system is built on the mere assumption that, at any given time, a limited and predictable portion of the population will require a relatively known mix of health care services. It is not established to cover health care needs during a novel, mass pandemic, where the population will have urgent needs that will be treated at unprecedented rates. The system should have policies that support Americans during normal times and unprecedented times or emergency times such as during times of a pandemic.
Economy wise, it is not clear of when the economy will get back to normal, or at least begin the full recovery process. The future is very uncertain but bright. “I don’t think any of us think we’ll get the economy back to 100 percent before there’s a medical answer,” James Glassman, JPMorgan Chase’s head economist for commercial banking stated. “The longer it goes on, the more damage it does.”
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Disclaimer: The views and opinions of Eric Lawrence Frazier are his own and do not necessarily represent views of First Bank or any organization affiliated with Eric Lawrence Frazier, or the Power Is Now Media Inc. First Bank is an Equal Credit Opportunity Lender. Eric Lawrence Frazier, MBA is also a Vice President and Mortgage Advisor with First Bank. NMLS#461807 and a California Licensed Real Estate Broker DRE# 01143482. Email: Eric.firstname.lastname@example.org. Ph: 714- 475-8629.
Eric Lawrence Frazier MBA
President and CEO
The Power Is Now Media Inc.