Why the CARES Act Needs To Be Recurring

As the coronavirus pandemic continues to affect the global economy, the US continues to suffer from diminishing consumer consumption and, as a result, continued decline in internal revenues. A lacking consumer confidence, deficiency in consumer demand, and uncertainty surrounding the future of the global virus landscape continues to obscure the future of the global economy (Torry, 2020). Overall, all of these indicators are pointing towards the concept that a cure must be found in order for the economy to rebound. Presently, however, the United States government must provide recurring stimulus wages to households for ensuring household financial adequacy.  

Although stores and companies are beginning to reopen, the current US economic predicament continues to cause uncertainty. Recent statistics collected by the United States Department of Commerce report that the US GDP in the second quarter has seen the steepest drop since 1947, with GDP levels falling to 32.9% annual rate in the second quarter, a 9.5% drop compared with the same quarter a year ago (Torry, 2020). According to the Wall Street Journal, the US economy is noted to have contracted at a record rate last quarter and weekly jobless claims rose for the second straight week, serving to indicate that a slow recovery is in the process (Torry, 2020). This has happened as states continue to impose lockdowns across the country to contain the virus.

With regards to household employment and labor, the US Labor Department stated that applications for weekly unemployment benefits recently increased by 12,000 to 1.43 million as of July 25th. In addition, the number of people receiving unemployment benefits increased by 867,000 to 17 million in the week ended July 18th, indicating that the recovery will be a tedious process (Torry, 2020). Furthermore, the number of people receiving benefits, known as continuing claims, have been declining in recent weeks and the latest weekly Household Pulse Survey indicated that 51.1% of households suffered a loss of employment income in the third week of July, up from 48.3% four weeks prior (Torry, 2020). Both statistics serve as poignant indicators that the economy is weakening again.

The US Census Bureau stated that the decline in the US’ second quarter GDP portrays the detrimental impact that consumer and business spending has sustained from the virus (Torry, 2020). Specifically, statistics exemplify that consumer spending declined at a 34.6% annual rate amidst declines in services spending, such as health care. Business spending, on goods such as software, research, and development, also suffered losses (Torry, 2020). On a national level, US exports and imports dropped significantly as well, which diminishes internal economic efficiency and security. Although some states reopened their economies, achieved partial rebound in jobs and spending, and are showing promising signs of increased shipping traffic and energy market stabilization, strict restrictions remain in place due to the increase in recent cases.

Currently, the pandemic continues to instigate doubt with regards to the US economy, as production and manufacturing jobs continue to be displaced. Examples of this phenomenon can be witnessed in the cases of Boeing and Harley-Davidson, whereby commercial jet and motorcycle production have sustained manufacturing slowdowns due to lack of demand and have led to significant cuts in employment (Torry, 2020). A private research board, known as the Conference Board, noted this week that its index of consumer confidence sank to 92.6 in July from 98.3 in June (Torry, 2020). This has occurred as people are becoming less optimistic about the short term outlook on the economy. Overall, it is evident that a vaccine is essential for social and economic norms to rebound. As states continue to seek solutions for curbing the diseases spread and minimizing the influence of the pandemic, it is important for the government to realize which tasks are most imperative ("The CARES Act Works for All Americans", 2020). Although the US economy is having its worst downturn in decades, economic development means more than putting up positive GDP growth rates. In order to minimize the social cost of the pandemic, the government should enforce stricter mandates on social distancing and provide the public with more social security benefits, such as the CARES Act provisions currently being offered, to enable people to continue practicing social distancing and engaging in safe practices (Sen, 1983). 

Works Cited:

Sen, A. (1983). Poverty and famines. Oxford University Press.

The CARES Act Works for All Americans | U.S. Department of the Treasury. (2020). Retrieved 1 August 2020, from https://home.treasury.gov/policy-issues/cares

Torry, H. (2020). U.S. Economy Contracted at Record Rate Last Quarter; Jobless Claims Rise to 1.43 Million. Retrieved 2 August 2020, from https://www.wsj.com/articles/us-economy-gdp-report-second-quarter-coronavirus-11596061406