Finance

The COVID-19 shutdown: A timeline of how the pandemic changed the US economy

AP-Matt Rourke

Although the U.S. has passed the two-year mark since the arrival of COVID-19, the country is still working to recover from the economic toll of the pandemic.

In March 2020, the U.S. shut down its economy, shuttering businesses and telling all nonessential workers to stay at home in an attempt to slow the spread of COVID-19. 

The sudden shutdown took a drastic toll on the U.S., as businesses shed millions of jobs in an attempt to stay afloat and two presidential administrations had to use executive orders and pass massive spending bills to try to stave off economic collapse.

Since the initial onslaught of measures that crippled the economy, the U.S. has slowly been working to restore the pre-pandemic economy, but as businesses have come back and the public has moved toward living with the virus, inflation has skyrocketed and presented new threats.

Here is a timeline of how the COVID-19 ravaged the U.S. economy and where it is now.

The economy before COVID-19 hit

Although there were grumblings of a new serious illness about to make waves around the world, the U.S. was operating normally in January 2020, and the economy under President Trump was relatively strong.

Unemployment was at 3.5 percent, with 5.8 million citizens searching for work, according to the Bureau of Labor Statistics. 

American businesses were doing well and the economy showed signs of growth with rising incomes.

In January 2020, consumer spending increased by 0.2 percent as incomes went up 0.6 percent.

March 2020 — The pandemic hits

As coronavirus cases started to creep into the United States, President Trump signed the first COVID-19 package, the Coronavirus Preparedness and Response Supplemental Appropriations Act.

The measure doled out $2.5 billion in aid to local governments and international communities and offered funds to assist research for a vaccine.

But cases spread rapidly. And as sports leagues declared shutdowns in mid-March, the U.S. economy did the same. Restaurants, entertainment venues and retail stores were among the thousands of places to shut their doors to try and slow COVID-19’s spread.

The unemployment rate spiked as millions were out of work.

Initial unemployment claims surged from 281,000 early in the month to 3.3 million by March 26.

Overall, the economy shed more than 850,000 jobs in March 2020 before a whopping 20.5 million were lost in April, leading to the unemployment rate climbing all the way to 14.7 percent.

On March 27, Trump signed a $2 trillion COVID-19 relief bill, the CARES Act, which gave each adult in the U.S. a one-time payment of $1,200 and added another $500 for every child.

Money was also provided to different business sectors, and small businesses were granted billions of dollars in loans and grants to counter the blow of the pandemic.

The COVID-19 economy after the initial shock

The unemployment rate in April was the peak during the pandemic and thousands of businesses were forced to close their doors, many for good.

Trump signed another $484 billion in coronavirus aid at the end of the month to help small businesses and provide funding to hospitals and for COVID-19 testing.

May, June and July saw the unemployment rate remain above the 10 percent mark, with little aid coming from the federal government.

When the unemployment rate finally dropped below 10 percent to 8.4 percent in August, Trump signed executive orders releasing new measures to help Americans who were still struggling economically.

The orders included measures to create the Lost Wages Assistance program and extend the moratorium on student loan payments.

The unemployment rate steadily declined through the rest of the year as people got back to work, hitting 6.7 percent in December when the first COVID-19 vaccines were distributed throughout the U.S. for the elderly or high-risk people.

At the same time, Congress agreed on another stimulus package for the U.S. that cost $900 billion.

That package gave direct checks of $600 to Americans, expanded the timeline for unemployment benefits, extended the eviction moratorium, and offered more money for small businesses and industries that were hit hardest during the pandemic. 

Data showed that 2020 was the worst year for economic growth since 1946, with the economy shrinking by 3.5 percent.

The economy surges and threatens to overheat under Biden

Unemployment still failed to reach pre-pandemic levels in 2021 as the U.S. battled through new COVID-19 variants and various surges in cases but saw a loosening of restrictions. 

At the beginning of the year, January saw an unemployment rate of 6.4 percent with 10 million people unemployed when Biden took office.

The first relief package passed under Biden was the American Rescue Plan, which was signed in March.

The plan offered $1,400 cash payments directly to citizens, increased the annual Child Tax Credit and expanded unemployment insurance and benefits.

As the delta variant COVID-19 wave subsided, states began loosening restrictions and returning to some semblance of normalcy.

Sporting events were fully packed with spectators, and entertainment venues began to open for business.

By the end of the year, the unemployment rate was back down to 3.9 percent as most businesses were allowed to reopen without interference from the federal government. 

Gross domestic product in 2021 grew the fastest in decades as businesses reopened and millions were able to get back to work and get back to spending. 

Overall, the economy grew by 5.7 percent and was able to recover faster than it did during the Great Recession.

The economy in 2022 and beyond

While unemployment hovered at just around 4 percent at the beginning of the year, the billion in payments to Americans and the return to work led to spikes in consumer prices on items like cars, groceries and utilities.

All states dropped COVID-19 restrictions, though some cities have renewed them as cases have increased, and vaccines and boosters are available for everyone over the age of 5.

No more relief packages have been issued but Biden has continued to extend the pause on student loan payments.

The unemployment rate was just 3.6 percent in March, the closest seen to pre-pandemic numbers in two years.

Unemployment and job numbers have receded as the largest economic threat, as record-breaking inflation has taken hold and become a hot topic in the U.S.

Supply chain issues due to the pandemic and the Russian invasion of Ukraine have caused a number of factors contributing to skyrocketing costs.

With the economy reaching inflation numbers not seen in 40 years, the Federal Reserve this week raised its interest rate by 0.5 percent, the largest such increase in more than 20 years.

Amid the surging growth and the spiking inflation, Democrats and Republicans are looking to seize on economic factors to gain support in the upcoming midterm elections.

Tags COVID-19 COVID-19 economy GDP inflation Trump unemployment

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