How has COVID-19 impacted the economy? NU Prof. Stephen Nelson discusses


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The mammoth coronavirus relief package enacted late last month will cost less than most lawmakers anticipated, according to the Congressional Budget Office. Political science Prof. Stephen Nelson said the size of the supply and demand shocks caused by the coronavirus pandemic “rivals, if not exceeds” those of the early 1930s that led to the Great Depression.

Christina Van Waasbergen, Reporter

In Northwestern College Democrats’ first virtual event of the quarter, political science Prof. Stephen Nelson discussed the economic effects of the COVID-19 pandemic and how the U.S. government has responded to them.

To an audience of 21 listeners over Zoom on Thursday, Nelson said the virus has impacted the economy by causing both a supply and demand shock, which he described as a “double whammy.” The initial supply shock occurred when China stopped producing massive amounts of goods due to the outbreak, he said. This was quickly followed, he added, by a rapid decrease in demand for many industries that require face-to-face interaction due to social distancing.

The size of these shocks “rivals, if not exceeds, the supply and demand shocks of the early 1930s that produced the Great Depression,” Nelson said.

The economic downturn, Nelson said, has caused many businesses to lay off workers to save money. He said the scale of job loss has been “incredible,” and that it will likely continue until a medical breakthrough in preventing or treating the virus gives people confidence that they can return to their normal lives without risking their health.

Discussing the government’s response to the economic damage caused by the pandemic, Nelson pointed to the massive stimulus bill passed in late March and the series of programs implemented by the Federal Reserve to increase the money supply. He also explained how the government has acted to reorganize production, ordering companies to help produce critical goods like medical supplies, which are lacking in supply.

In response to a question about global leadership in dealing with the pandemic, however, Nelson expressed skepticism about the willingness of the current administration to display the kind of hegemonic leadership needed from the United States to stabilize the world economy.

“A lot of this hinges, then, on what happens in November,” Nelson said.

McCormick sophomore Ayesha Prashanth, president of NU College Democrats, said the talk was the group’s “test run” for how virtual events would go in the future. She said it went well, and that students may have felt more comfortable asking questions in the virtual format than in person.

Prashanth said the group decided to host this talk because the economic impact is an aspect of the pandemic that is more difficult for students to understand.

“We thought that it would be one of the more valuable areas to have that sort of question-and-answer-type discussion,” Prashanth said.

Weinberg freshman Maryarita Kobotis, the public relations and communications director for NU College Democrats, said she thought Nelson’s talk was “super interesting.”

“I don’t personally know a ton about the economy, and especially the state of things right now.” Kobotis said. “So I think it was very eye-opening to hear from somebody as knowledgeable as him.”

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