U.S. GDP plummeted by 32.9 percent in the second quarter of this year, but disposable personal incomes were up by 42.1 percent. That is thanks to an unprecedented level of government spending to keep the economy afloat. Since the coronavirus pandemic triggered mass layoffs and furloughs and shuttered businesses in March, the U.S. federal government has provided an extra $600 per week in unemployment insurance benefits—money used to pay rent, buy food, and keep up consumer spending. Four months later, new unemployment claims are rising again as the growing number of COVID-19 cases in the South and West forces businesses to close down.
Every country has faced grim economic side effects from lockdown, but the attempted solutions vary widely. Some are relying on direct grants to citizens, some on compensating businesses, and some simply on muddling through the chaos. Many have been more successful than the United States. And as COVID-19 cases surge after weeks of phased reopenings around the country, the United States now appears to be on the cusp of another economic downturn caused by the government’s failed response to the pandemic.
