With Monterey County’s order to shelter in place now lasting over two months since Wednesday, March 18th, hundreds of thousands of residents have reordered their lives to stay at home to prevent the spread of the COVID-19 outbreak. Jobs, businesses, and transportation have come to a sudden halt while awaiting the next order from the county. Indeed, orders to shelter in place have immensely impacted the entire country: while the health effects of the pandemic have taken a psychological toll and strained families, hospitals, and healthcare professionals, the economic impacts of the shelter-in-place order have threatened nearly the entire population of the U.S., foreshadowing threatening outcomes.
Over the span of just a few weeks, almost all businesses in the country have shut down. With the exception of essential businesses, which are regulated on a state-by-state basis but generally include services such as grocery stores and pharmacies, little to no money is being made. Due to fear of the spread of the virus and drops in oil prices, the stock market dropped significantly at the beginning of March after a record high level in February. Moreover, on March 16, 2020, the market dropped nearly 3000 points and fell 12.9%.
The widespread halting of travel and mass transportation is linked to the issues caused by the widespread shutdown of businesses. As of March 31st, the U.S. Department of State has enforced Level 4 of its Global Health Advisory, which advises citizens to avoid all international travel, leaving airlines and airports empty and threatened by bankruptcy. Faced with fearful travelers and increased restrictions, travel agencies can now only wait for the next measure.
Independent of airlines are global shipping companies who have significantly slowed exchanges. With many Chinese factories shutting down and production decreasing, shipments have been cancelled and normally busy ports are now quiet. San Francisco’s trading ports, for example, are empty with no employees at work. Additionally, as long as transportation industries continue to slow, the unemployment dilemma will only be exacerbated.
Understandably, with little to no transportation and exchanges occurring, the U.S. saw a drastic drop in the country’s demand for oil. Although the fact that gas prices have consequently become cheaper may immediately seem positive, the root of the issue is far more serious. As a result of this plummeted demand, many companies face a lack of storage space for their oil. Costs for storage have become greater than their profits, and companies have thus resorted to paying buyers to take their oil. This means that beginning on April 20th, oil prices turned subzero between traders. Meanwhile, over 160 million barrels of oil are being stored in tankers at sea, and storage is running out. The International Energy Agency reported, “Never before has the oil industry come this close to testing its logistics capabilities to the limit.” Unfortunately, the sudden standstill that has taken place negatively affects both the trading companies and those relying on oil production as no profit is being made. Currently, any resolutions of this issue remain unimplemented.
In the past six weeks in the U.S., over 30 million residents have filed for unemployment benefits as they are unable to support themselves and their families without work. Understandably, with nearly every business closed, the majority of the country is at home and without jobs. Many entrepreneurs have begun selling their businesses as they experience bankruptcy; millions have been fired from their jobs as businesses can no longer afford to maintain their typical standards of work. Over the past two months, Congress has passed four different relief measures that have poured around three trillion dollars into the economy in an effort to relieve the devastating commercial impacts of the pandemic. Nevertheless, Senate Majority Leader Mitch McConnell recently reported in an interview, “No economic policy can fully end the hardship so long as public health requires that we put so much of our commerce on ice.” He later declared, “This isn’t even a stimulus package. It is emergency relief. ” Specifically, the measures are intended to expand unemployment benefits while delivering cash payments to residents based on their income and family size. Unfortunately, although the stimulus package is beneficial, many Americans are demanding that their states be reopened in order out of fears that the economic side effects of sheltering in place will outpace the acute health impacts of the virus.
Currently, intense controversy continues as many are divided between staying at home in the midst of the COVID-19 pandemic and reopening businesses to prevent further damage to the economy. As the side-effects of staying at home and unemployment remain a pressing issue, the question of how long shelter-in-place measures can continue remains urgent. At the moment, health officials emphasize that orders to stay at home will continue indefinitely, as hospitals wait for the influx of patients diagnosed with COVID-19 to steadily decrease. Now, with many protesting for or against the continuation of quarantine, an impactful social and political decision remains to be made.