Economic Problems: Possible initiatives to protect small businesses:
A public health-driven economic crisis is different:
A public health crisis has unique impacts on the economy and worker economic security. First, it hits supply and demand simultaneously and across many markets and regions. Consumers may be afraid to shop or go to entertainment venues. Workers may be unable to work if workplaces, schools, or child care centers are shut down, or if they are sick or exposed to the virus. Supply chains are disrupted, limiting production. Overall growth and business confidence can crater. The economy could grind to a near-halt in heavily affected industries and geographic areas owing to the need to quarantine to stop the pandemic.
This economic fallout is similar to a natural disaster, whereby businesses and people have little control over whether they will be affected by the virus and its economic ripple effects. It is also made worse by spillover effects such as credit market disruptions, misinformation, and herd behavior that make it look like a financial crisis. In the case of COVID-19, add in the racism arising from the disease’s origin in Asia, and businesses in U.S. Chinatowns have already seen disproportionate and undeserving economic hits. With its fewer resources, rural America is hit as well.
As with both natural disasters and financial crises, addressing the underlying problem is essential to getting the rest of the economy going again. For a natural disaster, the physical environment has to be safe enough to rebuild. For a financial crisis, the risk of bank and credit market runs have to be removed, and bad debt has to be recognized so that people and businesses can get access to credit again when they need it. In this case, this means that governments, especially at the state and local level, will need to do whatever they can to contain the public health crisis and manage the economic knock-on effects. A wide range of additional work will need to be considered at every level of government to confront supply chain shortages and boost economic and public healthy resiliency.