28 May COVID-19, How Far We’ve Come, Where We Are, And Where We’re Going Next
It has now been about six months since the infamous coronavirus began popping up on our news headlines. And now, we are three months into a nationwide quarantine that has left millions jobless and even more without any idea as to what the future holds. But with many small businesses struggling to make ends meet and no clear end to the shut down in sight, some counties and businesses are beginning to take matters into their own hands. This is even happening here in California. But there are new developments in the COVID-19 story every day, some good, some bad. Let us look at where we started and how far we have come in this unsettling time.
On December 31st, an influx of unusual cases of pneumonia is detected in the Wuhan province of China. By the 7th of January, the culprit had been identified and named the 2019-nCOV virus, later changed simply to COVID-19. On January 11th the first official death caused by the virus went on record. Fast forward 6 weeks and Italy is the epicenter of the largest outbreak in the Western world and has put their entire country on complete lockdown. At this point in time, these were extreme measures by anybody’s standards. Little did we know that America was soon to be the next hotspot. As New York’s numbers began to rise, state by state the country went into lockdown. By March 27th, the gash afflicted on the country’s economy was deep enough to demand the signing of a $2 trillion stimulus deal to strengthen the sluggish U.S. economy, the largest bill of its kind in history. Once the country learned how indefinite the lockdown would be, job loss began to soar. On April 2nd 6.6 million people filed for unemployment, the highest number of initial claims in history, and by May 8th the Department of Labor Statistics reported 20.5 million nonfarm jobs to have been lost placing the American unemployment rate at 14.7 %.
With the death counts rising but not as fast as the unemployment claims, many small businesses began voicing their dissatisfaction with the mandated restrictions. Many of the small businesses, restaurants, in particular, cannot handle the ambiguous end dates of the quarantine. So, many began to reopen, but there has been friction from the government. In Illinois, Governor J.B. Pritzker announced that any businesses defying the lockdown orders could face as much as a misdemeanor. In El Dorado California, Cherie Baldridge owner of the Cafe El Dorado chose to reopen last Friday against orders of the lockdown. She, like many of the counties and other businesses, states that the lockdown circumstances do not truly apply to her and her business. She only has one employee and 90% of their business are local return customers. Many other businesses such as gym owners are struggling to figure out how they are going to adjust their business to the virus with some owners filing lawsuits on government municipalities after being threatened with fines for trying to reopen in different counties. And still, other companies and agencies are filing suit against the state. The pressure is on for government officials to take action now as many states, especially California are beginning to suffer massive tax losses.
California faces a $54.3 billion deficit to this new budget. The shortfall is almost 37% of the $147.8 billion budget. According to the Department of Finance, forecasters believe the state’s big three tax sources, personal income, sales, and corporations, will plunge 25 percent. The only answer to this problem is to restart the economy. Be careful, but, open!
But it is not all doom and gloom, aside from the fact that social distancing is working, there have been many reports of possible cures and effective treatments for the virus. Sorrento Therapeutics out of San Diego claims to have found an antibody that can rant an immunity to the virus as well as induce recovery for those who are already infected as stated by Dr. Henry Ji founder and CEO of Sorrento Therapeutics. Dr. Ji also states that once they get FDA approval, they will be able to produce about 200,000 treatments per month and they are taking steps to be able to produce millions to meet demand. Labs and medical facilities around the world are working on possible antibody cures and treatments. These antibody treatments teach our bodies how to recognize the coronavirus allowing a person with the treatment to not only fight off an existing infection but also offer protection against further infections.
What does the government plan on doing about the economy you may ask? Jeff Rose of Forbes magazine covered this earlier in the week. He stated that multiple new stimulus bills
are floating around Washington D.C. The most generous of which is suggesting monthly payments until the worst of the pandemic is over, which would be 3 months after the department of health and human services declares an end to the emergency. This main bill is suggesting a $2,000 a month payment to each eligible American (based on the previous tax bracket qualifications for the original stimulus bill) until the worst of the virus is over. Married couples with children could receive up to $10k per month if they are making under $200,000 as a household. Many believe that this plan could go through based on the pressure from the rapidly shrinking national GDP as well as the threat of another housing collapse. Not to mention the astounding and historic unemployment rate of 14.7% as of April. But such a massive bill could cost up to $304 billion per month and inflation is no joke. Not to worry though, there are still quite a few more practical stimulus bills being considered, including one that has a maximum payout opportunity of $5,500 a month, costing about half as much as the original. But this is only a short-term fix which will create a long-term problem. The economy needs to get going quickly, but safely.
So, what do we do? Well, we could sit and wait for a cure, for Uncle Sam to give us some free cash, or for this to just blow over. But what good is waiting for someone else to take care of you? In this volatile time, it is important to make sure that you are tactfully positioning your money and yourself to maximize your growth potential while minimizing your risk. Take action and take control of your finances in this uncertain time. Contact us at Ortiz World Wealth to ensure that your money is working just as hard for you as you worked to acquire it. And remember, Plan Smarter Live Better.