COVID-19 price tag estimated in trillions
Depreciation in U.S. dollar value to boost agricultural trade and offset losses.
Sep 09, 2020
The COVID-19 pandemic is expected to reduce the U.S. gross domestic product (GDP) by $2.5 trillion and employment by 19 million full-time equivalent jobs over the next year, according to a study coordinated by Texas A&M AgriLife.
This spring, the U.S. Department of Homeland Security's Center of Excellence Cross-Border Threat Screening & Supply Chain Defense (CBTS) at Texas A&M teamed up with Arizona State University’s DHS Center of Excellence, the Center for Accelerating Operational Efficiency and researchers at Victoria University in Melbourne, Australia, to examine the economic impacts of COVID-19 on U.S. agriculture sectors.
While certain that the pandemic will have a significant impact on the U.S. economy, Dr. Greg Pompelli, the Texas A&M CBTS director, said the researchers used this project to gain a clearer picture of the pandemic’s shorter- and longer-term impacts on the U.S. food and agriculture sectors in comparison to other critical sectors.
“This analysis gives us a critical and realistic evaluation of how the pandemic has and will continue to impact our nation’s and the world’s food supply,” said Dr. Patrick Stover, vice chancellor of Texas A&M AgriLife, dean of the College of Agriculture & Life Sciences and director of Texas A&M AgriLife Research. “It will be critical that we work together to elevate food system concerns and develop solutions that address the economic consequences to serve as a foundation for lasting recovery.”
To help understand these impacts, researchers utilized a model of the U.S. economy that included a special emphasis on the major food and agriculture sectors. The team used quarterly economic data in their model of the U.S. economy to determine the effects of the pandemic and the impacts of related policy responses on the U.S. economy and agriculture sectors.
In July, the researchers completed their initial quarterly economic projections of the immediate impacts and recovery that the U.S. economy and agriculture sectors may experience between March 2020 and February 2022.
“As we all witnessed, COVID-19 and measures taken to slow disease spread harmed lives as well as the economic prospects of businesses and communities worldwide,” Pompelli said.
Their findings estimate that COVID-19 will reduce U.S. GDP year by 11.9%, or $2.5 trillion, over the next and reduce employment by 12.2%, or the equivalent of 19 million full-time jobs.
However, the report concluded that compared to most other sectors such as tourism, air transport, education, restaurants and lodging, the U.S. food and agriculture sectors will experience smaller economic impacts because they were not subject to shutdowns and reductions in aggregate consumer spending brought on by job losses.
“The resulting recession had a relatively small impact on the overall demand for farm products,” Pompelli said. “Still, COVID-19 caused income declines in all food and agricultural sectors.”
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