We’ve all seen what Covid-19 has done to our daily thought processes, the political divisions in our country and to interpretations of what constitute basic constitutional rights. The mask debate is reaching new levels on a daily basis. These factors may make it seem a solution and relief are further away now than they were in April.
There’s good and bad news here. According to the U.S. Bureau of Labor Statistics, nonfarm unemployment rose by 4.8 million in June. However, the unemployment rate declined to 11.1% which indicates that there’s a cyclical wave in tendencies with panic and unemployment.
Perception and Reality – How Hysteria Takes Hold and Shapes the Overall Economy
Let’s step back for a moment and consider how a recent set of public health challenges played out across the nation. The University of Michigan conducted a study which indicated that the Swine Flu outbreak (H1N1) actually did lead to a sort of mass hysteria. The May 2009 study discovered that people perceived the H1N1 outbreak to be “more deadly” than the Ebola outbreak which swept across African nations at roughly the same time when in fact the opposite was true.
The study found that as perception of risk increases, the feelings and anxiety for individuals around their own risk also increased, even if there is no demonstrable risk involved.
Researchers say that same hysterical reaction which occurred during the Swine Flu pandemic may be happening again in 2020 as a result of COVID-19.
They say such reactions are “a collective state of mind” capable of convincing entire populations of risk factors that aren’t based on evidence or logic.
The authors of the U of M study said fear and paranoia generated by the thought of contracting the virus leads to panic-buying and a tendency toward passing on misinformation, which furthers the anxiety and fear in the general public.
The following chart from the US Bureau of Labor Statistics (May 2020), we’ll notice that the unknown is in fact devastating with more than 33 million people filing for unemployment in the early stages of Covid-19.
With employment dropping at a new low for 2020, and Covid-19 cases still on the rise in many states, we are faced with the looming possibility of a W-Shaped Recession.
While growth in employment rates seems to provide some cause for optimism, does that uptick represent a continuous trend? Will positive changes in employment rates due to consumer behavior signal an end to the damage to the overall economy, or will yet another drastic rise in Covid-19 cases and fear plunge us back into a climate of uncertainty?
Read more about how the economy will impact banks, credit unions and the banking industry at banksbestrates.com…