Running Head: CORONA VIRUS RESPONSE 1

Corona Virus Response

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Corona Virus Response

Governments all over the world have put their normal operations on hold as they try to

understand the novel coronavirus (COVID-19) and the potential impacts that it has on their

countries. The United States federal government is no different, although it has not made any

substantial moves or responses to the virus. There are currently 53 cases in the United States

(Jernigan, 2020). The U.S. has already evacuated some of its citizens from the epicenter of the

virus, Wuhan. They also put on quarantine measures and just today lawmakers have reached a $8

billion bill to fund the pandemic. From the above, it is clear that the U.S. is responding to the

virus outbreak, albeit slowly as others continue to see it as a lesser risk to the wellbeing of the

country. Thus the big question remains, should the federal government respond to COVID-19?

From a personal perspective, the federal government should respond to the COVID-19

pandemic. One of the reasons for this opinion is due to the adverse effects that the virus will

have on the supply chain of America if the government fails to respond. Some U.S.

manufacturers solely depend on products from China. With the COVID-19 outbreak, there was a

disruption of the global supply chains. The implication of this is that manufacturers will face a

shortage and are likely to face increased costs of production, leading to cost-push inflation

(Bloom & Canning, 2014). This is where the increase in the expenses of production leads to a

hike in the price of the commodities, which will adversely affect consumer spending. There will

also be most likely to be demand-pull inflation as consumers scramble for the few products

available. The response of the government could aid in sourcing for alternative supply chains

before the increase comes knocking on America’s doors.

However, even with the likelihood of demand-pull inflation, it is vital to analyze the situation

from another perspective. Demand-pull inflation mostly occurs when unemployment is low, and
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therefore the consumers are more confident when they are spending. In this case, COVID-19 is

likely to reduce employment with its effects on the global supply chain. Therefore there is also a

part of the American citizens who will cut on spending unless the spending is for basic amenities

such as food. Additionally, the advice that people need to stay at home to stop the virus from

spreading will also have an impact on the GDP of the country as people shy away from public

places (Nutting, 2020). The response from the American government will likely give people

more assurance on its ability to contain the virus. The answer, in this case, could include the

provision of protective gear and stricter screening and quarantine measures.

The other reason why the fed should respond to the novel coronavirus is since there is the risk of

the pandemic, causing a recession. Currently, the stock and bond prices have fallen to an all-time

high. This has happened despite the virus not having spread so much to the U.S. therefore,

imagine what would happen to the economy if the situation were to escalate? People would fail

to travel, go shopping, or even attend work. The result of this would be reduced economic

activity, which would lead to economic decline, also known as a recession (Madhav et al., 2017).

The U.S. has not reached this point as the industries not directly affected by the virus are

still operational. They have not reported a slump in business, but the stock prices are a predictor

of what is likely to happen if the virus continues to spread. Government response would

introduce measures to keep consumers spending the way that it is. Some of these measures may

include cutting interest rates. The strategy, which the fed has already put in place, ensures that

there are reduced borrowing costs that would keep businesses afloat at these hard times. It would

also probably lead to an increase in stock prices (Bloom & Canning, 2014).

Despite all these reasons for the government to respond to the coronavirus, it is essential

to note that their measures may not be able to prevent economic losses arising from the
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pandemic. The government can put as much money into the consumers' pockets, but they can

never replace goods made by factories that have closed down in fear of their workers getting the

virus. They also cannot stock empty shelves. These are the natural limitations that would put the

fed at a disadvantage in the quest to ensure that America does not become economically crippled

due to the virus. They should, however, not hinder the resolve to protect the country from the

COVID-19 pandemic.
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References

Bloom, D., & Canning, D. (2014). Epidemics and Economics. Program on the Global

Demography of Aging Working Paper Series

Jernigan, B. (2020). Update: Public Health Response to the Coronavirus Disease 2019 Outbreak

— United States, February 24, 2020. Centers for Disease Control and Prevention

Madhav, N., Oppenheim, B., Gallivan, M., et al. (2017). Pandemics: Risks, Impacts, and

Mitigation. In: Jamison DT, Gelband H, Horton S, et al., editors. Disease Control

Priorities: Improving Health and Reducing Poverty. 3rd edition. Washington (D.C.): The

International Bank for Reconstruction and Development / The World Bank

Nutting, R. (2020). The coronavirus is aiming for consumer spending, the heart of the American

economy. Market Watch, Retrieved from https://www.marketwatch.com/story/the-

coronavirus-is-taking-aim-at-the-heart-of-the-american-economy-consumer-spending-

2020-03-03