Marc Cuniberti: The economic damage from COVID
The economic damage from COVID-19, coupled with humankind’s decision on how to deal with it, continues to wreak havoc on worldwide economies. The shutdowns, in an attempt to slow the virus, resulted in a record number of businesses reducing hours or going under completely. Then the massive stimulus programs, in an attempt to mitigate the damage, required trillions in government borrowing, stuffing an already over-bloated deficit into an even larger debt load, shackling government balance sheets for decades. This tsunami of government funds then lit the fires of inflation, resulting in the skyrocketing prices of many of the things we buy.
The fear of contagion and those massive unemployment bonus payments caused people to stay home while businesses scrambled for workers. Many enterprises were unable to fully function due to staffing shortages and some had to shut their doors completely. Then, as unemployment benefits ran out, it appeared many would start going back to work.
It was not be, as the rise of the Delta variant struck fear in the hearts of many and back home they went. That meant businesses which were on the verge of reopening and starting to ring the cash registers found their seats empty and their revenue streams drying up once again. Fast forward a few months and vaccination levels continued to climb, so businesses again looked toward more paying customers and more available workers. But again, the recovery stalled as business owners then found themselves stymied by, in my opinion, unwarranted and onerous vaccination mandates. These mandates are now causing a record number of workers to quit their jobs.
According to the U.S. Department of Labor, 4.3 million Americans quit their jobs in August, setting a new record. Among the highest level of the voluntary resignations were in the professional and business services, healthcare and social assistance vocations where vaccinations were mandated the heaviest. Meanwhile 10.4 million job openings were recorded at the end of August despite relatively high unemployment figures. Never before have we faced high unemployment levels while the business sector finds it difficult to fill job openings.
Insufficient staffing is causing worldwide bottlenecks and severe supply shortages. Warehouses sit full of undelivered goods, unable to find workers to pack and ship product. Transportation companies, also unable to find enough staff, cannot unload enough ships, log enough truck miles or make enough deliveries to satisfy demand. Shutdowns have shuttered microchip factories and a slew of manufacturing plants, making the shortages that much worse.
Many argue the fear of the Delta variant is causing most of the staffing problems, while others maintain vaccine mandates are the major roadblock, confirmed by the record number of voluntary resignations.
Whatever the reason, shortages are putting even more stress on an already untenable situation.
Some argue the entire decision process of the worldwide powers-at-be has been flawed from the beginning. Shutdowns were claimed to be based on bad science and the unwillingness of many to accept the inevitable and unpreventable damage that a pernicious virus would ultimately cause. Others maintain we didn’t do enough, and that COVID, and our response to it, was only made worse by the non-compliance of many, ignoring the shut downs, not wearing masks and the unwillingness to vaccinate.
Regardless of who is to blame, the record number of resignations is causing undue hardship on businesses and individuals alike. The resulting shortages of goods and services because of a lack of available workers are now exasperated by the record number of resignations, making an already tight labor market even tighter.
Meanwhile, the inflation caused by supply side shortages may spawn what some are calling the perfect storm as it pertains to wreaking severe havoc on the economies of the world. It remains to be seen how many more shocks the economic system can handle, but one thing is for certain: the economic effects from COVID are far from over.
Marc Cuniberti holds a B.A in Economics with honors from San Diego State University and is the host of Money Matters carried on 66 stations nationwide. California Insurance LIc# 0L34249. Call him at 530-559-1214 or visit http://www.moneymanagementradio.com
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John Cassidy, the longtime CEO of Sierra Central Credit Union, has announced that he will retire January 15, 2022, ending his 22-year career as CEO of Sierra Central Credit Union.