Conagra brand CEO Predicts the existence of inflationary tendencies even after the recent variant of Coronavirus is contained. And hence the necessity to draw a framework to tackle both issues.
Hysteresis Effect in economics refers to the effects that persist even after the initial cause that gave rise to the effects is removed. This effect is majorly used for two economic phenomena-unemployment and international trade. Here, it’s neither of the two but is used to explain the aftermath of coronavirus. How effects stay for extended time periods, even after coronavirus is contained.
The CEO predicted that the inflationary pressures on the economy will stay back even after the coronavirus goes away. This is due to the deeply entrenched fact that inflation is an indicator of turbulence in the economy. The coronavirus impacts every possible dimension of the economy, from the consumer to the manufacturer to the producer and so on. This does not stop here.
It ripples across the world, as most of the economies are facing pandemics and get multiplied. The effects have a resounding feedback mechanism due to globalization and feedback into the economy.
This process leads to the staying back of many indicators and leads to the Hysteresis effect.
The inflationary pressure is going to persist due to the fact that the sectors affected by the lockdown and other measures undertaken to contain the virus cannot recover immediately. The recovery is a process and it depends on multiple players and the world economy, due to interdependence among the nations and the production process is divided among the nations on the basis of comparative advantage. Hence, immediate recovery is out of context, even after a mild blow of coronavirus.
The industry and the government need to make a plan for both, to contain the virus and to push the economy towards a growth path without triggering inflation more than necessary. The USA is considered a very resilient economy, it has faced depressions and recessions time and again and has continued its growth process vibrantly and becoming one of the most developed economies of the world.
COVID cases surge in the USA
More than 1 million new Covid infections were recorded in the United States in a single day, setting a new record.
According to data provided by Johns Hopkins University, 1,082,549 new coronavirus cases were reported on Monday, i.e. 3/1/2021, as the highly contagious omicron variety continues to spread across the country.
The new daily figure takes the total number of cases confirmed in the United States to 56,189,547 since the outbreak began. In total, the virus has claimed the lives of at least 827,748 people in the United States.
Effect of COVID on USA’s economy
The economy of the United States has been on a roller coaster ride for the past two years, with the coronavirus and the emergency government reaction causing the sharpest, shortest recession in history as well as the strongest increase in over 40 years.
The recently released Wilmington Trust’s 2022 Business Owners Success Survey found “business owner optimism and confidence in the U.S. economy and their own businesses are almost back to pre-pandemic levels with 77% saying they are very optimistic about their business prospects – approaching the 81% who answered the same just before the pandemic.”