The other devastating effects of COVID-19
Coronavirus isn’t just costing lives; it’s also costing livelihoods. As the death toll rises around the world and the disease continues to spread throughout the United States, reaching numbers it’s hard to fully comprehend, it’s costing the global economy trillions in lost income, business bankruptcies, tourism dollars, and more. So, just how much money will it cost us when all is said and done?
Estimates from Bloomberg in early March put the potential cost at $2.7 trillion—but that was before coronavirus was declared a pandemic, the United States and the rest of the world went on lockdown, and most European countries banned American travelers. Now, according to a report from the Congressional Budget Office (CBO) released over the summer, those numbers have ballooned exponentially. The CBO predicts that the pandemic will shrink the U.S. economy alone by approximately $8 trillion over the next 10 years, which roughly translates to a 3 percent decline in the GDP. Here’s a closer look at what this virus is doing to us financially—and will continue to do in the coming months and years.
Airlines and hotels are suffering
The travel and logistics sectors have been the hardest hit, says Andrew Schrage, CEO and co-founder of Money Crashers. In particular, airlines and transportation companies lost billions in market value since the beginning of the year. “The shock is worse than anything that’s happened since 9/11,” Schrage says. “Depending on the extent and duration of the pandemic, the long-term impact could wind up being worse than 9/11.”
Airlines alone are set to lose at least $100 billion through 2021, according to the International Air Transport Association, and the trillions in government aid haven’t managed to stanch any of the bleeding. The same goes for hotels, though they have started to do more business as people begin to travel domestically. An August 31 report from the American Hotel & Lodging Association found that “nearly two out of three hotels are at or below 50 percent occupancy…and four out of 10 hotel workers remain unemployed,” according to USA Today. Furloughs are also continuing to translate into layoffs. And overall, the World Travel and Tourism Council predicts a possible loss of 197 million travel industry jobs worldwide and a subsequent $5.5 trillion loss from the global GDP. If you’re ready to travel but want to stay close to home, consider these 55 best road trips in America.
Cruises are still mostly docked
Cruise lines have faced huge hurdles over the past few months. Before they were ultimately docked in mid-March, cancellations were on the rise, and some cruises were quarantined due to COVID outbreaks (and passengers were stuck onboard since the ships weren’t allowed to dock). While American cruise lines were supposed to reopen for business in the late summer, the CDC recently extended the no-sail order through September 30. European cruises have started to sail again, though some have already had COVID outbreaks.
In June, Carnival reported a $4.4 billion loss—and that was just for the second quarter. And Carnival, Norwegian, and Royal Caribbean stocks were down between 55 and 70 percent for the year. All that said, cruise lines are planning for a busy 2021, according to Condé Nast Traveler, with the industry reportedly seeing increased bookings and also limited availability due to new social distancing and safety protocols. Things may be different the next time you board, however—here are 14 ways cruises could change forever after coronavirus.
The restaurant industry is in trouble
The numbers are enough to turn your stomach: The National Restaurant Association estimates that the restaurant and foodservice industry in the United States alone lost around $120 billion in sales—just during the first three months of the pandemic. As we all know, restaurants big and small continue to struggle, as dining still hasn’t resumed fully in most places, and in the places where it has, capacity is significantly lower in order to accommodate for proper social distancing. If things continue in this fashion, that number could balloon to $240 billion by the end of 2020. Here’s more on just how much money the restaurant industry has lost.
Millions of Americans have lost their jobs
When businesses were shuttered, they weren’t making money…which meant there wasn’t any money (or, at least, there was less of it) to pay employees. Even the businesses that did remain open were negatively impacted by the shutdowns and the economy contracting. As a result, there were furloughs, then layoffs, and a general tightening of company purse strings, with some companies instituting pay cuts or eliminating independent contractors. While small businesses are particularly susceptible to the effects of people staying home, away from crowds and businesses, even big businesses have faced sometimes-insurmountable issues. According to research from investment bank Jefferies, bankruptcies from big companies increased 244 percent in July and August compared to the same period in 2019.
So, how did all of that translate to workers? In April, unemployment rates were even higher than they were during the Great Depression, notes the Brookings Institution, and more than 40 million unemployment claims were filed in the spring. While some of those jobs have come back, the picture is still not pretty. According to the U.S. Department of Labor’s Bureau of Labor Statistics, 24.2 million people were unable to work or worked fewer hours in August because “their employer closed or lost business due to the pandemic.” While this is down from 31.3 million in July, it’s obviously still a monstrous number. On a positive note, these are the states with the most COVID-19-related hirings.
Extended unemployment and sickness may lead to personal bankruptcies
Even before the pandemic hit, many people were living paycheck to paycheck in this country and things were precarious. Add in layoffs, child-care issues, and costly medical bills, and it’s a recipe for disaster. Back in March, a Heathcare.com and YouGov poll found that nearly half of insured Americans worried about the costs of treatment if they came down with coronavirus—and that was among insured adults. Their fears proved valid. According to The BMJ, problems have arisen with the cost of testing, repeat doctor visits, extended hospital stays, and charges for out-of-network health care workers even when a hospital is technically in-network.
But all of this hasn’t led to an avalanche of personal bankruptcies just yet. Why? For starters, these medical bills are just starting to accumulate, so their effect isn’t yet fully known. Also, in terms of unemployment-related issues, as the New York Times notes, the government’s stimulus packages helped keep people afloat…but unfortunately that $600 a week in federal unemployment payments ended on July 31. Now, bankruptcy experts say that a devastating financial storm is likely on its way. Here’s what really happens when you file for bankruptcy.
New York City ground to a halt
While this happened in a number of major cities in an attempt to slow the rate of infection, it was perhaps nowhere near as jarring as it was in the city that never sleeps. Museums were closed, restaurants were empty, and Broadway’s lights turned off. While museums and restaurants have reopened in varying capacities, Broadway will be dark until 2021, with a handful of productions hoping to premiere in the spring. While it may be hard to understand just how much revenue has been lost, consider this: In 2019, when a power failure caused Broadway to go dark for five hours, it cost producers $3.5 million in revenue. Now multiply that by 30-plus days and 12 months for some seriously staggering figures. Of course, that doesn’t take into account the lost wages for the thousands of actors, production staff, and associated businesses that benefit from Broadway, Off-Broadway, the Met, and Lincoln Center.
According to the Washington Post, Broadway generally makes $2 billion in ticket sales annually and contributes $575 million in taxes to New York City. All of that is now gone, and it’s just the tip of New York City’s new financial problems. With so many people out of work, small businesses in trouble, real estate defaults looming, tourists staying away, some residents moving out of the city, and emergency funds depleted, New York will see a revenue loss of up to 16 percent in 2021, according to a new study in the National Tax Journal. Check out these 20 ways city life could change forever after coronavirus.