Editor’s note:This blog was published byThe Conversationon May 16, 2023. A version of it was also published by the Los Angeles Times.
The big idea
The economic toll of the COVID-19 pandemic in the U.S.will reach US$14 trillionby the end of 2023,our teamofeconomists,public policy researchersandother expertshave estimated.
Putting a price tag on all the pain, suffering and upheaval Americans and people around the world have experienced because of COVID-19 is, of course, hard to do. More than1.1 million peoplehave died as a result of COVID-19 in the U.S., and many more have been hospitalizedor lostloved ones. Based on data from the first 30 months of the pandemic, we forecast the scale of total economic losses over a four-year period, from January 2020 to December 2023.
To come up with our estimates, our team used economic modeling to approximate the revenue lost due to mandatory business closures at the beginning of the pandemic. We also used modeling to assess the economic blows from the many changes in personal behavior that continued long after the lockdown orders were lifted – such as avoiding restaurants, theaters and other crowded places.
Workplace absences, and sales lost due to the cessation of brick-and-mortar retail shopping, air travel and public gatherings, contributed the most. At the height of the pandemic, in the second quarter of 2020, our survey indicates that international and domestic airline travel fell by nearly 60%, indoor dining by 65% and in-store shopping by 43%.
We found that the three sectorsthat lost the most groundduring the first 30 months of the pandemic were air travel, dining, and health and social services, which contracted by 57.5%, 26.5% and 29.16%, respectively.
These losses were offset to a degree by surges in online purchases, a series of largefiscal stimulus and economic relief packagesand an unprecedented expansion of the number ofAmericans working from home– and thus were able to keep doing jobs that might otherwise have been cut.
From 2020 to 2023, the cumulative net economic output of the United States will amount to about$103 trillion. Without the pandemic, the total of GDP over those four years would have been $117 trillion – nearly 14% higher in inflation-adjusted 2020 dollars, according to our analysis.
We also simulated four different possible economic outcomes had the number of COVID-19 deaths been different because of either more or less successful public health strategies in the first 30 months of the pandemic.
The direct health expenses, driven mostly by hospitalization costs in these scenarios, would have totaled $20 billion in a best-case scenario in which 65,000 Americans would have died from January 2020 to June 2022. In the worst-case scenario, about 2 million would have died during that period, with $365 billion in direct health-related expenses.
Based on our findings, most economic losses were not due to these health care expenditures.
Why it matters
The COVID-19 pandemic’s economic consequences are unprecedented for the U.S. by any measure. The toll we estimate that it took on the nation’s gross domestic product istwice the size of that of the Great Recessionof 2007-2009. It’s 20 times greater than the economic costs of the 9/11 terrorist attacks and 40 times greater than the toll of any other disaster to befall the U.S. in the 21st century to date.
Although the federal government has nowlifted its COVID-19 Public Health Emergency declaration, thepandemic is still influencing the U.S. economy. Thelabor force participation rate, which stood at 62.6% in April 2023, has only recently neared the February 2020 level of 63.3%.
What is not known
We modeled only the pandemic’s standard economic effects. We didn’t estimate the vast array ofeconomic costs tied to COVID-19, such as lost years of work after an early death or a severe case of long-COVID-19.
We also didn’t assess the costs due to the many ways that the disease has affected the physical and mental health of the U.S. population or thelearning loss experienced by students.
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FAQs
Real gross domestic product (GDP) early in the pandemic fell abruptly to 9 percent below its level at the start of the recession — a much steeper decline than the nearly 4 percent drop in the deepest part of the Great Recession.
How bad is the US economy going to get in 2023? ›
According to a range of measures, the economy ended 2023 on a high note and has continued to be strong in 2024: Both gross domestic product (GDP) and payroll employment ended the year higher than in the Congressional Budget Office's (CBO) pre-pandemic (January 2020) projections for 2023.
How much has COVID-19 cost the US? ›
In the USA, the cost of the COVID-19 pandemic has been estimated at US$13 trillion for the first 20 weeks of the pandemic (90% of the country's annual Gross Domestic Product (GDP)) when drastic NPIs were predominately implemented, and approximately half of that figure corresponds to the projected 10-year decline in GDP ...
How does COVID-19 affect the macroeconomy? ›
GDP-per-capita fell by 6.7 percent and employment by 5.4 percent in emerging economies, considerably worse than both wealthier countries where output and employment losses were 4.6 percent and 2.4 percent, respectively, and lower income countries where those losses stood at 3.6 and 3.1 percent.
How much has the cost of living increase since COVID? ›
Since February 2020, consumer prices have increased 20.9 percent, a Bankrate analysis of Bureau of Labor Statistics data shows. That's well above the historic average for a four-year period.
How much money was pumped into the economy during COVID? ›
$500 billion in government lending to companies affected by the pandemic. $349 billion in loans and grants to small businesses through the PPP and the expanded Economic Injury Disaster Loan (EIDL) program. More than $175 billion for hospitals and healthcare providers. $150 billion in grants to state and local ...
How much is the US economy in 2023 in trillion? ›
In 2023, the U.S. GDP increased from the previous year to about 27.36 trillion U.S. dollars.
How many trillion dollar economy is the US? ›
Economy of the United States
| Statistics |
|---|
| Population | 340,332,281 (August 30, 2023) |
| GDP | $28.78 trillion (nominal; 2024) $28.78 trillion (PPP; 2024) |
| GDP rank | 1st (nominal; 2024) 2nd (PPP; 2024) |
| GDP growth | 2.1% (2022) 2.5% (2023) 2.7% (2024) |
43 more rowsTop 10 Fastest Growing Economies 2023
| Name of the Country | Approximate GDP |
|---|
| India | 3.18 lakh crores USD |
| China | 17.73 lakh crores USD |
| Thailand | 50,594.7 crores USD |
| Japan | 4.94 lakh crores USD |
6 more rowsJul 19, 2024
In response to COVID-19, the federal government authorized an unprecedented $5 trillion in pandemic response spending. The majority of the prime recipients of this funding were located in the United States, however, approximately 2,000 prime recipients in 177 foreign countries received a total of $6.4 billion.
Globally, the economic burden of COVID-19 was estimated to be between US $77 billion and US $2.7 trillion in 2019 [13]. Another study calculated the quarantine costs of COVID-19 to exceed 9% of the global GDP [14].
How has COVID changed the world? ›
The COVID-19 pandemic swept across the planet, touching every corner of society from science and medicine to the economy, politics and race. In its wake, the virus overwhelmed hospitals, crippled industries and forced institutions like the George Washington University to move to remote work and learning.
Why is COVID-19 bad for the economy? ›
Revenue from air travel, indoor dining, and participation in large in-person gatherings fell by more than 50% during the first 30 months of the COVID-19 pandemic. Changes in the public's behavior, brought about by regulations and personal health concerns, caused the decline. Data spans March 2020 to June 2022.
How does COVID-19 relate to economics? ›
The COVID-19 pandemic sent shock waves through the world economy and triggered the largest global economic crisis in more than a century. The crisis led to a dramatic increase in inequality within and across countries.
What did COVID-19 affect the most? ›
COVID-19 most often causes respiratory symptoms that can feel much like a cold, the flu, or pneumonia. COVID-19 may attack more than your lungs and respiratory system. Other parts of your body may also be affected by the disease. Most people with COVID-19 have mild symptoms, but some people become severely ill.
What is the effect of the COVID-19 pandemic on the economics of United States emergency care? ›
The COVID-19 pandemic adversely impacted the economics of ED care, with large drops in overall and, in particular, low-acuity ED visits, necessitating reductions in clinical hours. Staffing cutbacks could not match reduced revenue at small EDs with minimum emergency physician coverage requirements.
How is the US economy doing right now? ›
The economy is expanding at a crisp pace, the labor market is loosening slightly and inflation is slowing from its peak. The Federal Reserve looks at several economic indicators — along with the stock market — to form a better picture of the economy and make decisions on interest rates.
What is the main cause of inflation in the United States? ›
Monetary policy is a major cause of the increase in inflation, says Stanford economist John Taylor. Inflation rises when the Federal Reserve sets too low of an interest rate or when the growth of money supply increases too rapidly – as we are seeing now, says Stanford economist John Taylor.
How much has the GDP dropped during COVID? ›
As the economy shut down in the second quarter of 2020, economic output as measured by real GDP fell 28 percent at an annual rate—the largest quarterly drop in history. Despite the fiscal and monetary policy enacted in 2020, real GDP fell by 1 percent over the four quarters of 2020.
