Economic Effects of COVID-19 in the United States and Penn-sylvania
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Economic Effects of COVID-19 in the United States and Penn-
sylvania
J I VA K N I S C HA L A N D OM A S A N R IC HA R D S O N
T he coronavirus (COVID-19) pandemic has had devastating economic impacts around the
country and the world. There have been over 100 million cases worldwide, with this figure
continuing to rise as the death count surpasses two million as of January 15, 2021.1 In the United
States, the number of total cases has surpassed twenty-three million, while the number of daily
cases continues to rise at a rapid rate, with over 230,000 new cases on January 14, 2021 alone.2 In
many places, hospitals are overrun and hospital beds are in short supply. Despite the grim legacy
of the pandemic, the end may be in sight and not all hope is lost. Several companies (namely,
Moderna and Pfizer-BioNTech) have vaccines that have been successfully tested, approved by
the FDA, and are increasingly available for distribution.3
With lockdowns occurring for an extended period of time, along with continued
restrictions on businesses, many small businesses and all industries have been hit hard by the
pandemic. In this article, we review some of the effects of the COVID-19 pandemic on key sectors
of the US economy, including small businesses and three industries (the cruise industry, movie
industry, and food delivery industry). We also discuss the economic impacts on Pennsylvania
in particular, both because it is of interest to the Carnegie Mellon community but also because
many of Pennsylvania’s challenges are illustrative of economic effects felt in many states. We
conclude by discussing how the economy can recover from this devastating pandemic.
The Effect on the US Economy
Since the pandemic began, many Americans businesses suffered and families faced
issues paying rent or putting food on the table. This was a result of an inability to work in the
1 “Coronavirus Update (Live),” Worldometer, accessed January 15, 2021, https://www.worldometers.info/coronavirus/?utm_
campaign=homeAdvegas1?.
2 “CDC COVID Data Tracker,” Centers For Disease Control And Prevention, accessed January 15, 2021, https://covid.cdc.gov/covid-
data-tracker/#cases_casesper100klast7days.
3 Shawn Radcliffe, “Here’s Exactly Where We’re At With Vaccines And Treatments For COVID-19,”Healthline, January 22, 2021,
https://www.healthline.com/health-news/heres-exactly-where-were-at-with-vaccines-and-treatments-for-covid-19#COVID-19-vac-
cines.
Jivak Nischal is a junior at Carnegie Mellon University pursuing a dou-
ble major in International Relations and Politics and Psychology. While
participating in the Washington Semester Program last fall, Jivak interned
at DC Hunger Solutions. Having grown up in England before moving to
Pittsburgh at the age of eleven, he is interested in foreign affairs, interna-
tional relations, and comparative politics. Additionally, he is very passion-
ate about social justice issues within the United States.
Omasan Richardson is a junior at Carnegie Mellon University majoring
in Ethics history and Public Policy with a minor in Politics and Public Pol-
icy. Omasan interned with The Mellman Group last fall as a student in the
Washington Semester Program. He is a native to Lancaster, Pennsylvania,
a rural area in south central Pennsylvania. This informed his decision to
focus on Pennsylvania for this article. In his free time, he enjoys relaxing
with friends and exploring different restaurants.
29
Jivak Nischal and Omasan Richardson
traditional sense, and even with businesses and industries opening back up, restrictions have
meant that people are unable to work or earn at the same capacity as beforehand.
Congress passed a stimulus package in April 2020 to ease some of the economic pain
during an uncertain time. Among other provisions, the Coronavirus Aid, Relief and Economic
Security (CARES) Act gave qualifying individuals up to $1,200 per adult with an extra $500 per
child. This bill was the equivalent of a temporary band-aid that did not really end the COVID-19
recession. One-time stimulus payment did not address unemployment rates being much higher
than before or longer-term economic problems. A second COVID-19 relief package was only
passed at the end of 2020 even as pandemic raged and economy struggled.
The Effect on Small Businesses Nationally
The COVID-19 pandemic has been especially devastating for small businesses. Starting
with lockdowns in March of 2020, any business deemed non-essential was told to close down,
including small businesses like restaurants. This differed somewhat across states with different
levels of closure, but overall there was a massive decrease in the number of businesses open.
Since January, small businesses alone have seen a decrease in around 20 percent of their
revenue.4 As revenue shrank, many small businesses were forced to fire or furlough their staff,
increasing unemployment. Some 98,000 small businesses around the country closed down for
good, adding to the economic shock.5 By providing loans and grants for small businesses, the
CARES Act is estimated to have increased GDP by about five percent in the short-run. However,
it is currently unknown if this increase will help accelerate economic recovery going forward
and if it does, by how much.6
The Cruise Industry
The tourism industry was hit hard by the pandemic. The Centers for Disease Control
and Prevention (CDC) has a system in which they categorize how safe it is to travel or attend
certain events during health crises, ranging from Level 1 (very basic precautions) to Level 2
(enhanced caution), Level 3 (avoid non-essential travel), and Level 4 (the highest and new level
of caution). Cruise ships, one particularly impacted tourist sector, are at a level 4.7 All cruise ship
travel is recommended to be avoided, as even without a pandemic it was common for diseases
to spread on ships. Given how infectious COVID-19 is, cruise passengers are at extremely high
risk of catching the disease.
Cruises have found it difficult to adapt. Many cruise ships have just been sitting idly by
as it is unsafe to use them currently. This was a huge hit to their revenue as many ships would
be running for months at a time and have now not been able to run since March. Since January
2020, cruiselines have seen a 70 to 80 percent decrease in stock prices. This is massive as cruises
were the largest growing travel sector before the pandemic.8
There have been some ideas on how to make some money during this time, including
the idea of a “cruise to nowhere.”9 Such cruise ships would not port at any cities and mostly just
4 Lauren Bauer, Kristin E. Broady, Wendy Edelberg, and Jimmy O’Donnell, “Ten Facts About COVID-19 And The U.S. Economy,”
Brookings, September 17, 2020, https://www.brookings.edu/research/ten-facts-about-covid-19-and-the-u-s-economy/.
5 Suzanne Phan, “Small Business Saturday Critical For Local Retailers Hit Hard By COVID-19 Pandemic,” Komo News, November
28, 2020, https://komonews.com/news/local/small-business-saturday-critical-for-local-retailers-hit-hard-by-covid-19-pandemic.
6 Paulson, Mariko. “The Long-Run Fiscal and Economic Effects of the CARES Act.” Penn Wharton Budget Model, May 5, 2020, ac-
cessed January 15, 2021, https://budgetmodel.wharton.upenn.edu/issues/2020/5/5/long-run-economic-effects-of-cares-act.
7 “COVID-19 and Cruise Ship Travel.” Centers for Disease Control and Prevention, accessed December 10, 2020, https://wwwnc.
cdc.gov/travel/notices/covid-4/coronavirus-cruise-ship.
8 Monique Giese, “COVID-19 Impacts on Global Cruise Industry,” KPMG, July 23, 2020, accessed January 15, 2021. https://home.
kpmg/xx/en/blogs/home/posts/2020/07/covid-19-impacts-on-global-cruise-industry.html.
9 “Covid-19: Singapore ‘Cruise to Nowhere’ Ends after Passenger Tests Positive,” BBC News, December 9, 2020, https://www.bbc.
com/news/world-asia-55241282.
30Economic Effects of COVID-19 in the United States and Pennsylvania
travel on the ocean, enjoying the amenities of the cruise ship like food and entertainment all
while mandating social distancing and mask wearing. With constant coronavirus testing, this
seemed like a good way to recoup some of the lost revenue during the pandemic. However,
within a week of the first cruise to nowhere, a passenger tested positive for COVID-19. This
was due to the fact that the mandatory test that passengers were required to have before getting
on the cruise was two to three days before they boarded the ship. The positive test case was
thankfully caught quickly which some may argue shows the system works. However, this simply
shows that engaging in activities like going on cruise ships is dangerous during this time, even
if precautions are put in place.10
Following the pandemic, the industry will likely see a huge influx in customers due to
people wanting to travel after being locked down for so long. So, this temporary lull is a test to
see if cruises can whether the storm of having a drastically reduced customer base.
The Movie Industry
The COVID-19 pandemic essentially imperiled if not broke the business model of the
movie industry. During the pandemic, many movies that were still in production were pushed
back as it was unsafe for actors to be on crowded sets. Those movies that had finished production
and were set for a theatrical release, had the problem that was a large part of their revenue was
expected to be made back in ticket sales. Cineworld, the company that owns Regal Cinema, has
seen a stock decrease of over 50 percent of its pre-pandemic level.11
Streaming technology has offset some of these losses. With most media companies
having a streaming platform that they are connected with (such as Netflix, HBO Now, or
Disney+), media giants have been able to move many movies planned for theaters to their
platforms with mixed results. The companies have been using a “pay-for early access” model.
Disney released their live-action Mulan remake to their platform in which if you wanted to
watch early it would cost thirty dollars.12 This, while more expensive than a single movie ticket,
might be more economical for some people, especially if they planned to take others to see it
with them. This model has turned out to be a big success, if the movie has enough of a reputation
to draw people to buy. Universal Studios’ movie Trolls World Tour, an animated family film
about singing trolls, made more on demand in a shorter time span than their other movies in
the franchise had made in five months in theaters.13
Two major reasons for the success of streaming are the changes in people’s habits
and revenue splits. With everyone stuck at home, parents spending twenty dollars for infinite
viewing is a much better deal than taking their young children out for a one-time event. This is
also a win for movie studios like Universal, as the studios would only receive about 50 percent
of the revenue from movie theaters before the pandemic. However, with digital rentals through
streaming, a much larger portion of revenue goes towards the studios.14 The future for movie
theaters is questionable as studios have seen that they might not need to be as reliant on them as
they have been in the past given the rise of streaming.
10 Patrick Oppmann and Marnie Hunter. “Covid-19 Outbreak Strikes First Cruise to Resume Sailing in the Caribbean.” CNN, No-
vember 11, 2020, accessed January 15, 2021, https://www.cnn.com/travel/article/caribbean-cruise-seadream-1-covid/index.html.
11 Frank Pallotta, “Movie Theaters Are Struggling to Survive the Pandemic. Many Won’t,” CNN, October 5, 2020, accessed January
15, 2021, https://www.cnn.com/2020/10/05/media/movie-theaters-regal-closing/index.html.
12 Nicole Lyn Pesce, “$30 To Watch ‘Mulan’ on Disney+ Right Now Is Either Outrageous or an Amazing Deal, Depending on Who
You Ask.” MarketWatch, September 5, 2020, https://www.marketwatch.com/story/30-to-watch-mulan-on-disney-is-either-outra-
geous-or-an-amazing-deal-depending-on-who-you-ask-2020-08-05.
13 Sarah Whitten, “‘Trolls World Tour’ Made More for Universal in 3 Weeks on Demand than ‘Trolls’ Did in 5 Months in Theaters.”
CNBC, April 28, 2020, https://www.cnbc.com/2020/04/28/trolls-world-tour-made-more-money-for-universal-than-trolls.html.
14 Ibid.
31Jivak Nischal and Omasan Richardson
Food Delivery Industry
One industry that has been able to carve out a larger niche in the world than before
the pandemic is food delivery services. Services like Postmates, UberEATS, or Door dash have
seen huge growth in revenue. The role they had in the market before COVID-19 was perfectly
suited for a pandemic. They work with smaller local restaurants to give those without the
infrastructure a delivery option to still serve customers. They also provide a source of income
for anyone willing to drive for them. This tackles two major issues that arose from the pandemic,
unemployment and the decline in small businesses.
Food delivery services have been so successful that UberEATS as a subdivision of Uber,
the ride sharing platform, has actually taken over the original division as the breadwinner for
the company.15 Even as some restaurants opened back up for in-store dining, delivery still saw
widespread growth. Similarly, the pandemic spurred a massive increase in grocery delivering
services as well. Instacart alone saw its downloads grow by 200 percent during the initial
outbreak.16 How people procure food may have changed forever.
COVID-19 and the Pennsylvania Economy
Relatively speaking, Pennsylvania was not hit particularly hard in the early stages of
the pandemic. By the summer of 2020, daily new cases were hovering around the one thousand
mark. However, since early October, the number of daily cases has been rising, with daily
cases surpassing five thousand in mid-November and then surpassing ten thousand by early
December.17 With over eighteen thousand people having died from the virus in Pennsylvania
alone, the number of cases continuing to increase has had profound effects on the state.18 The
economy of the state even reached a point where it was in the worst recession since the Great
Depression.19
The COVID-19 pandemic has meant that many people whose livelihoods rely on
interaction with others or large gatherings have suffered immensely. Pennsylvania, for example,
has many independent artists, writers, and performers, an industry that has taken a large
hit during the pandemic. Many Pittsburgh-based artists have been unable to hold classes or
performances since March 2020.20 Not only are they unable to bring in money, but most of their
lives revolve around interaction with other people, so losing that integral part of their daily lives
has had damaging effects on their mental health, too.
Other top industries in Pennsylvania include healthcare services, broadcasting and
telecommunications, and various administrative and support services.21 These are all industries
that require human interaction, and while some can be moved to an online platform, there is
no doubt that they suffer as a result of the various restrictions that have been put in place due
to COVID-19. As a result, the economy has taken an enormous hit, the like of which has no
comparison in recent history.
Many of the issues surrounding the economy nationally also affect Pennsylvania locally.
15 Kirsten Korosec and Alex Wilhelm, “Uber’s Delivery Business Is Now Larger than Ride-Hailing,” TechCrunch, August 6, 2020,
https://techcrunch.com/2020/08/06/ubers-delivery-business-is-now-larger-than-ride-hailing/.
16 Daniela Coppola, “Grocery Delivery App Growth Due to Coronavirus U.S. 2020.” Statista, November 27, 2020, accessed January
15, 2021, https://www.statista.com/statistics/1104519/grocery-delivery-app-growth-coronavirus-us/.
17 “Pennsylvania Coronavirus Map And Case Count,” New York Times, accessed January 16, 2021, https://www.nytimes.com/
interactive/2020/us/pennsylvania-coronavirus-cases.html.
18 “ CDC COVID Data Tracker,” Centers For Disease Control And Prevention, accessed January 15, 2021.
19 Göktuğ Morçöl, “Economic Recovery In The Face Of COVID-19,” Penn State Social Science Research Institute, June 25, 2020,
https://covid-19.ssri.psu.edu/articles/economic-recovery-face-covid-19.
20 Teake Zuidema, “For These Pittsburgh-Area Performing Artists, The Pandemic Has Meant Lost Work, Reflection,” Publicsource,
October 28, 2020, https://www.publicsource.org/pittsburgh-performing-artists-lost-work-hip-hop-ballet-drag-tuba/.
21 “Top Industries In PA,” Cumberland Area Economic Development Corporation, accessed January 15, 2021, https://cumberland-
business.com/news/top-industries-in-pa/.
32Economic Effects of COVID-19 in the United States and Pennsylvania
Pennsylvania has extended unemployment benefits to help counteract the mass unemployment
the state faces.22 Governor Tom Wolf has allocated $96 million with added assistance from the
federal government to help out small businesses in the state that are struggling. However, the
state has also received considerable backlash to the various restrictions placed on the way in
which people can run businesses or assemble during the pandemic. Coronavirus restrictions
in Pennsylvania were struck down by a federal court after four Western counties filed a lawsuit,
citing unfair restrictions placed upon people and their businesses.23 While the government in
Pennsylvania has been working on plans to get the state back to normal, this will likely have
to be done through programs such as contact tracing and limiting the amount of access older
adults have with the world.
What can be done?
COVID-19 has wrought both direct and indirect economic damage both nationally and
in Pennsylvania, with the US experiencing a recession comparable only to the Great Depression,
while various industries have had to adapt to survive.
The economic decline in Pennsylvania appears bleak, but this is not to say that there
are not ways to improve the situation. Governor Tom Wolf has stated that while reopening
businesses to aid economic recovery is extremely important, the health of Pennsylvania’s
residents is of the utmost priority. As a result, they plan to proceed with returning to work
cautiously and reopening different parts of the state depending on how bad the COVID-19
cases are in a particular area. In addition, the commonwealth is partnering with Carnegie
Mellon University to create a data-driven decision support tool to enable a balance between
maximizing economic results while minimizing health risks.24 Still, other steps must be taken in
order to help the economy recover from this pandemic.
First, in order to help the economy, recover sustainably, state and local policymakers
must take into account the geographic differences of various counties, due to the fact that urban
and rural areas have been affected very differently in terms of the industries affected and the
amount of people that have been infected by COVID-19. For example, consistent with national
patterns, urban counties in Pennsylvania have experienced many more coronavirus cases than
rural ones, which means that they cannot be opened up with the same speed, as this will just
lead to higher rates of infection.
Ultimately, there is not, nor should there be, a tradeoff between lives and livelihoods.25
The economy cannot function without healthy people, and people cannot survive if they are not
able to work or operate their businesses, so it must be understood that the economy bouncing
back is intertwined with reducing cases and combating the pandemic. As a result, widespread
vaccine distribution is crucial for industries to function again and for the economy to recover.26
Until then, widespread contact tracing and testing will make going back to work safer. If the
government is able to put resources towards testing and vaccine distribution, the virus will
be controlled, people will become healthier, and the economy will begin to recover after the
massive damage it has sustained.
22 “Plan for Pennsylvania,” Governor Tom Wolf, November 16, 2020, https://www.governor.pa.gov/plan-for-pennsylvania/.
23 Alison Durkee, “Pennsylvania Coronavirus Restrictions Struck Down By Federal Court”. Forbes, September 14, 2020, https://
www.forbes.com/sites/alisondurkee/2020/09/14/pennsylvania-coronavirus-restrictions-struck-down-tom-wolf-stay-at-home-order-
federal-court/?sh=3096b7534bdf
24 “Process To Reopen Pennsylvania,” Governor Tom Wolf, November 19, 2020, https://www.governor.pa.gov/process-to-reopen-
pennsylvania/.
25 Molly Callahan, “How Will The Economy Bounce Back After COVID-19?,” News@Northeastern, May 1, 2020, https://news.
northeastern.edu/2020/05/01/how-will-the-economy-bounce-back-after-covid-19/.
26 VOA News, “World Economy Will Bounce Back In 2021, OECD Says,” Voice Of America, December 1, 2020, https://www.
voanews.com/covid-19-pandemic/world-economy-will-bounce-back-2021-oecd-says.
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