Every single person in the world is now concerned about the bad influence of the coronavirus pandemic on various sectors such as the economy, health, education, culture, finances, and the society in general. Countries are trying hard to recover, taking the risky steps and investing all their energy and effort to change things for the better but as the second wave of the virus has already hit the world, the improvement is still far from nowadays. Some people are still stuck at homes, working remotely, fearing that the quarantine will start again, while others try to spend the time more productively while they can.
The rapid pace at which the Covid-19 is spreading has an unprecedented impact on the way we live and we do business. Many countries have been affected by the pandemic and of course, the United States is among them. According to Forbes, it seriously damaged the economy and financial markets of the US. Of course, it’s not a big surprise, and that kind of impact was predictable, but let’s discuss the ways how the pandemic influenced the financial industry of the USA.
The pre-pandemic economy of the US
Before the beginning of the coronavirus lockdown, the US economy was doing pretty well. The inflation was below 2% and the unemployment rate was so low as well. The economy of the country was rising at a fast pace and most of the states of America had the best time over the years. But the flourished economy of the country quickly disappeared as the virus hit the world.
During the second quarter, a significant portion of the US economy fell by about 32% and as Bloomberg reported, these kinds of big numbers haven’t been seen since the Great Depression back to 1920-1930s. The highest rate of unemployment was recorded in the post World War II era, but the pandemic set the new record in the USA, hitting 15% earlier this year.
Generally, the US economy is driven by consumer spending. Companies usually see a profit when the consumers spend and in that case, the economy succeeds. Current statistics show that at this moment there are about 7 million more unemployed workers than there have been in February. This is why it’s unlikely that the economy flourishes with so many on the sideline.
As more and more people became unemployed, they started to find alternative ways to make money. People began selling stuff, sharing their skills, capitalizing on businesses, and also, many of them tried taking part in forex trading. It’s a decentralized global market for exchanging currencies and it’s the largest and the most liquid market in the world. However, there are too many forex brokers in the world to choose which is why it’s important to take a look at the forex broker listing of 2020 to make side income and reach financial independence safely.
Other popular ways to generate side income during the lockdown have been becoming a freelancer and spending time on data entry and administrative things. Also, selling your things and becoming an online tutor have been among popular activities.
Will the financial sector of the US recover?
The answer is negative. Most of the experts believe that the recovery hasn’t started yet and the labor market of the US will be forever changed. First of all, during the pandemic, the companies have been adding technology to the workplace in order to maximize profits and they will highly likely continue this tendency. Also, companies started working remotely and as it turned out to be a good practice, many of them will continue doing so, which means the demand for commercial real estate will be decreased. But the most concerning fact is that many corporations have closed down forever and left their employees to find other job opportunities. Now more workers are trying to find fewer jobs and this could create a completely new labor market that values the employers.
The rise in the stock market
At the beginning of the lockdown the US stocks peaked, then fell over by about 50%, but from March to September 2 stocks have been rising. During February the stocks were more than 58% overvalued on the entire US market. By September a big rise was recorded and the stock market reached the highest number ever, even surpassing the Tech Bubble in March 2000. Now stocks are 84% overvalued.
How you may be confused, as we already said that the economy is facing a big threat and is not going to recover soon but the stock market is rising. The two aren’t interconnected and there is one simple reason why stock prices rise or fall. It depends on supply and demand. Usually, when buying pressure is bigger than selling, stock prices rise and they fall when selling exceeds.
Now as the November elections approach, probably a new challenge will turn up for the whole economy and financial sector of the United States. Besides, the spreading of the coronavirus pandemic continues and the winter will be crucial for the whole market. For now, the improvement isn’t predicted, but hopefully, things will change for good by the end of the year.