The novel Coronavirus pandemic is hitting the world economy hard. Hospitals are struggling to cope with increasing demand. Essential workers are raking in countless hours to restock shelves. Even more, citizens are losing their jobs as businesses close their doors.
What does all this mean for the global economy? Will the impacts of the Covid-19 virus cause another Great Recession in the United States? If you’re asking these questions, then you’re not alone. Experts from around the globe are trying to predict the pandemic’s impact, too.
Read on to learn about the next potential American recession in 2020.
What Does Covid-19 Mean for the U.S. Economy?
The Covid-19 virus has already altered the way people live in America. School is out, restaurants are closing their doors, and store shelves are bare. Federal and state governments continue to urge citizens to practice social distancing. That means a lot less money is getting spent on recreation and shopping, leading to a financial crisis.
What do all these changes mean for the economy as a whole? Here is what has occurred so far:
- Widespread economic losses are impacting businesses and households
- Volatile markets causing consumers to panic
- The unemployment rate will rise for the duration of the pandemic
- Certain industries (aviation, cruise lines) may go bankrupt
- Oil prices are plummeting
- The average consumer has more debt than they did in 2008
These economic impacts won’t end anytime soon, either. In China, the pandemic took at least two months to contain. Europe is still struggling. It’s likely that it will take even longer in America. The Trump administration will continue doing everything it can.
Are Experts Predicting a Recession?
These widespread economic impacts aren’t limited to the United States. They’re affecting the whole globe. Due to this unprecedented virus, experts believe a recession is VERY likely.
Here’s what the U.S. government, central banks, and the Federal Reserve are trying to do to prevent one:
- Lowering interest rates to near-zero
- Suspending student loan payments for at least two months
- Injecting $1.5 trillion into economic growth
- President Trump considering sending relief checks to citizens
Despite these efforts, a recession still appears to be on the horizon. The International Monetary Fund thinks it will be even worse than the 2008 U.S. recession. The group does think that economic growth will recover by next year, though.
The IMF’s prepared to hand out over $1 trillion in relief to its member countries that need it.
How to Prepare for the Impacts of Covid-19
Here are a few ways to help you prepare:
- Continue to pay your bills if you can
- Call your lenders and ask for help if you need it
- Refinance or apply for a new payment plan for your student loans
- Cut down on unnecessary spending
- Create a new budget
If you lose your job, then don’t get discouraged. Continue to look for a job you can do at home until the Covid-19 virus passes.
Looking to the Future: Stock Market Crashes and an Economic Slowdown
The economic impacts of the unfolding global pandemic have not yet surfaced. Monetary experts are all thinking the same thing, though — a global recession is imminent.
Use the tips provided above to help you and your family prepare for the next recession and the economic downturn. Get prepared, and start saving money while you can. If you’re interested in even more tips, then sign up for our LMB newsletter below.