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1 The Pandemic Effect on GDP Cody Smith Indiana Wesleyan University 4FA2023 Economic Analysis for Managers Professor: Choi, Kiwhan 09/18/2023

2 The Pandemic Effect on GDP Gross Domestic Product or GDP is a measurement of an economies growth or contraction over a specified period of time (Lockert, 2023). The number is calculated by adding up the number of goods and services an economy produces during the established time frame. Experts use this number to evaluate the health of an economy or a specific industry within that economy. These calculations can be used to make informed investments, evaluate the growth of certain sectors of an economy, and get the general size of a countries contribution to the world economy. The global pandemic that took place in 2020 was widespread and the impact it had on the United States was felt by all. The United States government took many steps to ensure the citizens of the country would be as safe as possible. These steps included shutting down the economy and sheltering in place. The economic downturn that followed effected the country’s GDP greatly and can be seen in the bar graph on page 1 of the BEA’s document. The pandemic rumors caused a reduction in GDP in the first quarter of 2020 but the largest impact was felt in the second quarter. The United States’ economy was slightly growing in late 2019 but fell by 35% at the second quarter of 2020. The shutdowns and social distancing regulations hurt some industries more than others. The food service industry was hit especially hard due to the lack of social interaction and close proximity of the dining areas within many businesses. The healthcare industry was also negatively impacted. People were simply not going to the doctor for checkups and preventative healthcare measures. Individuals wanted to avoid these Covid hot zones in order to shelter from

3 the disease. Recreational services were greatly impacted as well. Movie theaters, arcades, escape rooms, and other similar businesses suffered financial loss during this time due to the social distancing requirements. People were not comfortable going into these close proximity settings and risking their health for these activities. The effects of the pandemic were widespread and not limited to certain areas or certain industries. Large chain restaurants and small local diners were equally as hurt by the global pandemic. Despite the effects being widespread, some areas were more effected than others. Some states were not as strict with social distancing regulations as others and did not enforce curfews. These businesses were still effected by the pandemic but not to the degree other states felt the impact. The states that were not as strict allowed their gyms, restaurants, and recreational businesses to weather the storm. While these businesses did have hardships, they had a chance to survive the pandemic. The southern Indiana area has many small family owned and operated diners. These businesses are the life blood of the area and many people, especially the elderly, rely on these restaurants as meeting places for social gatherings. When the pandemic forced the businesses to restrict hours, employees, and seating capacities the profit margin was thin. The majority of these local businesses relied on these elderly customers to turn a profit but with these individuals being in the high risk group they sheltered in their homes. The financial impact was too much for many of these businesses and they had to shut down. There are many empty store fronts in the small Indiana towns due to the pandemic. We are recuperating but the economy is still on the road to recovery in this area.

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4 References Bureau of Economic Analysis. (2023, September 18). Gross Domestic Product (Third Estimate), Corporate Profits (Revised), and GDP by Industry, Second Quarter 2020 . U.S. Bureau of Economic Analysis (BEA). https://www.bea.gov/sites/default/files/2020- 09/gdp2q20_3rd_0.pdf Lockert, M. (2023, January 26). What is GDP? Business Insider. https://www.businessinsider.com/personal-finance/what-is-gdp

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