Thursday the 30th of July 2020. For most that is as insignificant a date as any, however for the US economy this day was one of the most significant and unprecedented days to date for one simple reason.On this date the US Bureau of economic analysis released its’ 2nd quarter GDP report which stated a 32.9% contraction in real GDP based on the advanced estimate from April-June. Now a contraction of a third for any business economic data would be concerning thus a 33% contraction in the total amount produced by an entire country would obviously be concerning and to maximise concern the country that experienced this contraction was none other than America a superpower of the world both economically and politically.
However to argue that because of one potentially isolated, albeit catastrophic event could cause the capitulation of Americas’ economic standing that compares to the collapse of one of the greatest Empires’ in global history is something most would consider to be a large and irrational assumption, however if we couple this data with other statistics then we may be able to see a correlation between Americas’ current situation and the Roman Empire prior to its’ imminent collapse.
In March and April 2020 22.2 million jobs were lost with an increase of only 7.5 million subsequently, in the months of May and June. However, obviously this is due to the unprecedented coronavirus thus maybe it can’t be compared to the Roman Empire. Howbeit, before comparing the current situation and the collapse of the Roman Empire, a brief understanding of the reasons for the fall of the Roman Empire is required. The most commonly known reason for the fall of the Roman empire was a string of military defeats to Germanic tribes that ended up ransacking Rome but more than just that, Rome was experiencing economic problems, political instability and the rise of an Eastern Empire. Nevertheless, the fall of the Roman Empire was thousands of years ago and as time has progressed and the human race has evolved, we have methods put in place to prevent history repeating itself. For example: the government. Its’ safe to say that government intervention should try to remove the brunt of the impact from the current situation and effectively mitigate any risk that America faces currently, right?
Wrong. By the end of July the governments’ enhanced unemployment benefits and paused mortgages were re-engaged and government funds started drying up after running a deficit for most of 2020, this means that these effects are not short term stats that will be rectified by next year but long term effects that will be detrimental to the American economy for years to come. Moreover, the technological advancements that have saved many people from unemployment have actually condemned more of the working class to permanent unemployment because it means the retail/food sectors within corporate districts have now lost their main clientele rendering a plethora of people unemployed as more and more people are now working virtually and these progressions will remain even after the ‘formal end’ of Covid-19. For this to be verified a case study that has high economic value to represent Americas’ economy and the city I have chosen is none other than the epicentre of technology San Francisco Bay. It is without a doubt that San Francisco Bay is one of Americas’ most prosperous cities with a GDP of $535 billion in 2019 it would be ranked as the 19th in the world when compared to national economies. Therefore a good analysis of Americas’ current economic wellbeing would be San Francisco whose house prices have been steadily rising, due to Silicon Valleys’ location, and the cost of living had previously skyrocketed with a $200’00 annual income not being high enough to purchase a house in San Francisco. But that is all in the past as rent prices have declined at a rapid pace due to working from home becoming a more popular option and the lock down halting more than half of San Francisco’ appeal. If this wasn’t”t enough, top income earners are also moving to luxury estates and the ramifications for this is much greater than it would seem as property tax makes up a large majority of the municipal revenue, so if all the very wealthy people leave then a lot of that revenue is lost as well.
Even now one could argue that America has recovered from worse phenomena than this i.e. the Great Depression or the financial crisis of 2008 however the difference is this recession has introduced long-term sustainable change similar to an invasion of a city in the Roman Empire and although this invasion wasn’t physical the economic invasion was just as detrimental. In the fall of the Roman Empire the great Empire was pillaged and looted by Germanic tribes and currently in America the main resource (i.e. economic supremacy) that provide America with the legitimacy to be considered an economic empire are being pillaged and looted by Covid-19 and without any means of support with government funds running low. The future of America seems dire and will be further analysed in the 2nd part of the series.
- Gross Domestic Product, 2nd Quarter 2020 (Advance Estimate) and Annual Update https://www.bea.gov/news/2020/gross-domestic-product-2nd-quarter-2020-advance-estimate-and-annual-update
- Evan Andrews 8 Reasons Why Rome Fell https://www.history.com/news/8-reasons-why-rome-fell#:~:text=Invasions%20by%20Barbarian%20tribes,encroached%20beyond%20the%20Empire’s%20borders.