The COVID-19 pandemic could result in net losses from $3.2 trillion up to $4.8 trillion in gross domestic product over the course of two years, according to a USC study released this week.
USC economists project that a best-case scenario for the United States hinges on whether initial mandatory closures and social distancing measures were sufficient to control the rise in coronavirus cases. In a worst-case scenario, infections would ramp up considerably after businesses reopen, forcing another round of closures.
The study comes just as new restrictions—the strongest in months—went into effect in Los Angeles County and elsewhere as officials battle an unprecedented surge in coronavirus cases.
The pandemic’s economic impact depends on factors such as the duration and extent of the business closures, the gradual reopening process, infection rates and fatalities, avoiding public places, and pent-up consumer demand, according to researchers with the USC Center for Risk and Economic Analysis of Terrorism Events (CREATE).
Real GDP is a measure, adjusted for inflation, that reflects the value and the quantity of final goods and services produced by a nation’s economy in a given year.
“In a best-case scenario, we would see containment measures, such as masks and social distancing become more widespread, and possibly even a vaccine by next year, and then businesses and institutions would be able to reopen at an accelerated pace,” said study team leader Adam Rose, who is the director of USC CREATE and a research professor at the USC Price School of Public Policy.
“But in a worst-case scenario, these countermeasures wouldn’t materialize, and reopenings would happen slowly, particularly because we would continue to see waves of infection,” he said. “Then, more people would likely lose their jobs, and the impacts of this disaster would continue to mount.”
The researchers found that the mandatory closures and partial reopenings alone could result in a 22-percent loss of U.S. GDP in just one year and an even greater loss of GDP over two years. Other key factors, though, will influence how disastrous the losses may be, they noted in the study published in the journal Economics of Disasters and Climate Change.
The research team noted that China has not sustained such losses due to aggressive containment measures resulting in a shorter lockdown period. They project that in a worst-case scenario, the U.S. GDP loss due to COVID-19 will more than quadruple that of China.
In early March, several states responded to a rise in COVID-19 cases by ordering the closures of non-essential businesses such as restaurants, bars, salons and retail stores. Some also halted or reduced public services to limit the spread, but many others took little or no action.
