Covid-19’s Economic Effect in the United States

Around this time last year, we published an article of predictions about what the Coronavirus could bring to the economy. At the time, we had no idea what a profound historical event the Covid 19 pandemic would have on society. Looking back a year later, it almost feels like 2020 through 2021 was longer than just one year. Practically nothing outside of maybe the Great Recession compares to the massive effect this virus has had on our economy and the future of so many industries. Let us look back at how our industry and the economy as a whole have changed in the last 12 months.

The Covid-19 Virus

Back in March 2020, when we first published a blog article about the Covid-19 Virus, there were only a few severe pockets of spread in the United States. Of course, the magnitude of the devastating months that followed led to one of the worse Pandemics in modern history. The harrowing human stories are countless, and although we would like to honor the memories of all who died, the focus of this article will be mainly on industry and the economy. That being said, our hearts go out to the families of the estimated 3.34 million (as of May 2021) people who have passed away worldwide.

Potential Recession

Last year the predictions regarding GDP shrink and an overall disruption of the financial markets may have been too optimistic. Last year the projections were 0.4 percent growth, whereas in reality, there was a whopping 3.5 percent shrinkage of the economy, which is the highest shrinkage since World War II. Although the unemployment rate has dropped since its record highs early in the year, the instability many Americans find themselves in cannot be measured by economic statistics. Many economists still believe that a recession might be upon us even as businesses begin to reopen fully. The effect of closures and lost jobs on the economy will be felt for years to come.

Keeping the Economy Afloat

Early in the pandemic, the prediction was that self-isolation and a near-total shut down of nonessential businesses would only be temporary. However, as stay-at-home orders persisted and unemployment skyrocketed, Americans were in desperate need of assistance. Stimulus packages and rent/mortgage moratoriums were instrumental in preventing a total breakdown of the economy. Many think the United States government could have done more and continue to do more, as these stimulus measures were few and far between. Luckily as we approach herd immunity from the vaccine later, this year normalcy may return.

New Trends

As the stock market fluctuated widely during the initial part of the pandemic, many investors began to diversify their portfolios. Private investments and crypto became more popular than ever before, and many new retail investors entered the market using platforms such as Robinhood. Although many of these investors are unique and do not have a high net worth, accredited investors kept investing in private funds for Rule 506(c) offerings. Accredited investors were the perfect type of investor for a fragile economy. Since they can generally make sound financial decisions and deal with potential loss, this group could continue investing in projects that help the economy continue to grow.

Many companies began work from home programs, including VerifyInvestor.com. Zoom meetings became the norm, and many individuals discovered the joys and stress of working from home. While working on professional projects, babysitting kids, meeting with clients while in pajamas, and staying focused when the world is upside down became the ordinary lives of so many working professionals. For issuers who wanted to verify accredited investors for their private funds, online services such as VerifyInvestor.com became more critical than ever.

2020 and the Covid-19 pandemic will be remembered as one of the most significant times in recent history. The effect it has had on society and our institutions will not become clear, maybe ever. Covid has decimated so many lives and industries while at the same time human ingenuity and generosity had flourished. As we are still dealing with infections, deaths, and a changing economy, keep up with the latest news on the VerifyInvestor.com blog.