The coronavirus has already wreaked havoc on businesses and economies around the world, and experts predict that the devastation will only get worse.
Will there be a recession in 2021?
The US economy will have a recession, but not until 2022. More business cycles will result as a result of Federal Reserve policy, which many enterprises are unprepared for. The decline isn’t expected until 2022, but it might happen as soon as 2023.
Is Canada on the verge of a recession in 2021?
According to a new study, two-thirds of Canadians are “in a psychological slump” following two grueling epidemic years.
According to Pollara Strategic Insights’ annual economic outlook, such negative emotions about the economy are actually better than they were in 2021.
“Canadians are in a psychological slump,” Pollara president Craig Worden said Tuesday, “but we are seeing signals of progress compared to last year.”
Indeed, 66% believe Canada is in a recession, despite the fact that the economy has been expanding since the third quarter of 2020, the first year of the COVID-19 epidemic, while 23% feel it isn’t and 11% aren’t sure.
In contrast, 81% of those polled last year said the country was in recession, while 9% said things were improving and 10% said they had no view.
“It’s encouraging to see Canadians’ economic perceptions improve,” Worden said, noting that public perception of recessions generally lags behind reality.
Two consecutive quarters of negative quarter-over-quarter economic growth are considered a recession.
Pollara polled 2,000 adults across Canada using an online panel from Jan. 13 to 18, with a margin of error of plus or minus 2.2 percentage points 19 times out of 20.
What is the state of the economy in 2021?
Indeed, the year is starting with little signs of progress, as the late-year spread of omicron, along with the fading tailwind of fiscal stimulus, has experts across Wall Street lowering their GDP projections.
When you add in a Federal Reserve that has shifted from its most accommodative policy in history to hawkish inflation-fighters, the picture changes dramatically. The Atlanta Fed’s GDPNow indicator currently shows a 0.1 percent increase in first-quarter GDP.
“The economy is slowing and downshifting,” said Joseph LaVorgna, Natixis’ head economist for the Americas and former chief economist for President Donald Trump’s National Economic Council. “It isn’t a recession now, but it will be if the Fed becomes overly aggressive.”
GDP climbed by 6.9% in the fourth quarter of 2021, capping a year in which the total value of all goods and services produced in the United States increased by 5.7 percent on an annualized basis. That followed a 3.4 percent drop in 2020, the steepest but shortest recession in US history, caused by a pandemic.
Is a recession expected in 2023?
Rising oil prices and other consequences of Russia’s invasion of Ukraine, according to Goldman Sachs, will cut US GDP this year, and the probability of a recession in 2023 has increased to 20% to 30%.
What should I put away in case of economic collapse?
Having a strong quantity of food storage is one of the best strategies to protect your household from economic volatility. In Venezuela, prices doubled every 19 days on average. It doesn’t take long for a loaf of bread to become unattainable at that pace of inflation. According to a BBC News report,
“Venezuelans are starving. Eight out of ten people polled in the country’s annual living conditions survey (Encovi 2017) stated they were eating less because they didn’t have enough food at home. Six out of ten people claimed they went to bed hungry because they couldn’t afford to eat.”
Shelf Stable Everyday Foods
When you are unable to purchase at the grocery store as you regularly do, having a supply of short-term shelf stable goods that you use every day will help reduce the impact. This is referred to as short-term food storage because, while these items are shelf-stable, they will not last as long as long-term staples. To successfully protect against hunger, you must have both.
Canned foods, boxed mixtures, prepared entrees, cold cereal, ketchup, and other similar things are suitable for short-term food preservation. Depending on the food, packaging, and storage circumstances, these foods will last anywhere from 1 to 7 years. Here’s where you can learn more about putting together a short-term supply of everyday meals.
Food takes up a lot of room, and finding a place to store it all while yet allowing for proper organization and rotation can be difficult. Check out some of our friends’ suggestions here.
Investing in food storage is a fantastic idea. Consider the case of hyperinflation in Venezuela, where goods prices have doubled every 19 days on average. That means that a case of six #10 cans of rolled oats purchased today for $24 would cost $12,582,912 in a year…amazing, huh? Above all, you’d have that case of rolled oats on hand to feed your family when food is scarce or costs are exorbitant.
Basic Non-Food Staples
Stock up on toilet paper, feminine hygiene products, shampoo, soaps, contact solution, and other items that you use on a daily basis. What kinds of non-food goods do you buy on a regular basis? This article on personal sanitation may provide you with some ideas for products to include on your shopping list.
Medication and First Aid Supplies
Do you have a chronic medical condition that requires you to take prescription medication? You might want to discuss your options with your doctor to see if you can come up with a plan to keep a little extra cash on hand. Most insurance policies will renew after 25 days. Use the 5-day buffer to your advantage and refill as soon as you’re eligible to build up a backup supply. Your doctor may also be ready to provide you with samples to aid in the development of your supply.
What over-the-counter drugs do you take on a regular basis? Make a back-up supply of over-the-counter pain pills, allergy drugs, cold and flu cures, or whatever other medications you think your family might need. It’s also a good idea to keep a supply of vitamin supplements on hand.
Prepare to treat minor injuries without the assistance of medical personnel. Maintain a well-stocked first-aid kit with all of the necessary equipment.
Make a point of prioritizing your health. Venezuelans are suffering significantly as a result of a lack of medical treatment. Exercise on a regular basis and eat a healthy diet. Get enough rest, fresh air, and sunlight. Keep up with your medical and dental appointments, as well as the other activities that promote health and resilience.
How can we get ready for the next downturn?
It is impossible to predict the exact reason of the next recession. We do, however, understand how it affects people on a personal level. Jobs become insecure or disappear. Businesses do not succeed. The financial markets suffer a setback, lowering portfolio values. Some people even lose their houses as a result of this.
Keeping this in mind, the following nine measures can be used to prepare for the next recession:
Shore Up Your Emergency Fund
Financial emergencies can occur at any time, although they are more common during recessions. Apart from having funds set aside for emergencies, having cash in the bank to cover you if you lose your work can be freeing.
While you don’t want to go overboard with your savings, you should consider increasing your emergency fund from three months’ worth of living expenses to six months or more. Having that kind of cash on hand can help you feel less worried about losing your work.
You can earn many times more than your local bank by transferring your savings to one of the top online savings accounts.
Nothing beats having money in the bank when a crisis strikes. It’s now or never to stock up on it.
Pay Off or (at least) Pay Down Your Debts
An impending recession might not be the best time to start a long-term undertaking, such as paying off your home early. However, it is a good moment to pay down or eliminate other debts.
Credit cards are at the top of the list. Paying down your debts is a great way to increase your cash flow because interest rates normally vary between 15% and 25%. Transferring your high-interest credit cards to a 0% balance transfer card is another effective strategy. This can eliminate interest payments for a period of 12 to 24 months, allowing you to put more money toward your debt. As a result, you’ll be able to pay off your credit cards more quickly.
Auto loans or other sorts of installment borrowing would be next in line. Even though the interest rates are modest, the high set monthly payments may be something you can’t afford if you lose your job. Simply removing a payment from your to-do list can be a huge stress reliever.
Even if you are unable to pay off your mortgage, you may be able to reduce your monthly payments by refinancing into a lower-interest loan. If interest rates rise before or during the recession, this will be an extremely wise strategy.
There is no simple solution to repaying student loans. It may be worth paying off only to be rid of the payment if it’s a tiny sum (or to avoid the possibility of default). However, a huge sum is comparable to a mortgage. To pay it off, you’ll need to make a long-term commitment. Rather than tackling a huge loan balance on short notice, you could be better off keeping the funds liquid for emergencies. Calculate the numbers and make the best decision you can.
There are ways to pay off student debts faster, but you’ll need to be willing to put in the time and effort. Examine many tactics to see which one will work best for you.
Refinancing is another option if paying off your student loans seems impossible. You may be able to acquire a lower interest rate and a smaller monthly payment by using one of the finest student loan refinance sources. That will not eliminate your student loan payment, but it will make it much more reasonable.
Start Cutting Living Expenses
This is the place where you may let your inner penny pincher loose. If you have any expenses that aren’t absolutely required, this is a great moment to cut them back or remove them entirely.
One of the most effective strategies to reduce living expenses is to pay off or reduce debt. A debt is no longer an expense after it is paid off.
Apart from debt, you should analyze all of your spending. Get rid of any Hulu or Netflix subscriptions that you don’t utilize. Have you considered severing your cable connection? It’s possible that now is the right time. Another target is if you have a gym membership but never go to the gym. Just make sure you have other ways to stay in shape.
Insurance. Now is a great moment to re-evaluate your insurance coverage completely. Insurance has become a substantial expense for most families, and premiums may often be decreased by reviewing policies on a regular basis. Committed to locating the greatest insurance in each area, including life, health, disability, business, and even pet insurance.
Food is another expense that could be targeted for cost-cutting. Begin with restaurant fare. Reduce your eating out to once a week if you normally dine out twice a week. Take advantage of coupons and deals to eat at lower-cost eateries.
Look into wholesale clubs when it comes to grocery shopping. You’ll have to join, but you’ll most likely recoup your membership fees on your first shopping trip. ALDI is a good option if you live near one. Although it is unusual for a grocery store, you can significantly reduce your grocery price by shopping there.
Finally, if you haven’t done so already, get serious about creating a budget. You can organize your finances with the help of free budgeting applications. When you have all of your income and expenses in one place, it’s easier to stick to a budget.
Delay Major Spending Plans
Consider deferring your purchase of a new home or car for a few of years if you’ve been thinking about doing so.
Making a substantial purchase and taking on a larger monthly commitment just before the slump hits is one of the conditions that gets individuals into financial problems during a recession.
This is especially true when it comes to purchasing a new home. House prices have reached all-time highs, surpassing those seen prior to the last housing crisis. That should be a warning sign.
It isn’t merely the purchase price of the home. When you move from a less expensive property to a more expensive one, your other expenses are likely to rise as well. Higher electricity costs and property maintenance, as well as the fees that come with moving into a new house, can all add up.
Rearrange Your Stock Portfolio
This does not imply that you should sell all of your stock assets. However, this might be a good moment to start shifting your portfolio to safer investments.
Stocks with a high dividend yield. There will be a shift in investor attention if the stock market falls along with the economy. When growth is uncertain, income becomes more crucial. High dividend companies may be preferable to growth ones.
Consider putting some money into dividend aristocrats, a type of stock that pays out dividends on a regular basis. These are significant, well-known corporations’ equities that have increased their dividends for at least the past 25 years.
If you’re planning to make adjustments to your portfolio allocations, now might be a good time to switch brokers. In the brokerage business, a number of things have changed recently, including the advent of zero commission trades. Look into the best online brokers for you and make the necessary changes while the markets are still acting normally.
a trust that invests in real estate (REITs). They’re similar to mutual funds, but they invest in commercial real estate. A REIT might own retail assets, office buildings, or big apartment complexes, for example. It’s a means to spread a modest sum of money across a variety of assets and even geographical regions.
REITs pay monthly dividends, provide capital growth, and may even provide tax benefits. And their historical performance has been on par with or greater than that of stocks. Between 1978 and 2016, equity REITs outpaced equities by a margin of 12.87 percent to 11.64 percent.
REITs are a terrific method to break up an all-stock portfolio and diversify your equity allocation. Even if equities fall, they may continue to generate positive returns.
Reduce the amount of company stock you own. You may want to reduce your exposure to corporate stock if you have a lot of it in your employer-sponsored retirement plan. Your employer’s financial issues will have an influence not just on your work, but also on the value of their shares. In a recession, having too much stock in the firm you work for might be a double-edged sword.
Start Building Cash Reserves
This does not imply that you should sell your investments to raise funds. Keep your new investment contributions in cash and cash equivalents rather than stocks and bonds.
- When the bear market ends, you’ll have cash on hand to purchase stocks and mutual funds at much reduced prices.
There’s one more thing to consider: cash is the only completely safe investment when the financial markets go haywire. You’ll be developing a truly safe area of your financial portfolio by increasing your cash reserves.
Make Yourself More Valuable on the Job
Staff reductions are common during recessions. During the previous recession, the unemployment rate peaked at roughly 10%. However, the good news is that 90% of employees did not lose their employment.
When the next recession arrives, you’ll want to be a part of that group. Make a promise to yourself that you will.
The greatest approach to do so is to improve your professional skills. Now is the time to get any credentials, professional training, or skill sets that will increase your employer’s value. During recessions, people do lose their jobs. The most valuable employees, on the other hand, keep theirs. You’ll have a far higher chance of making it among the survivors if you improve your work skills.
However, strengthening your abilities and qualifications has a supplementary benefit. If you do lose your job, you’ll be better prepared for the subsequent job search.
It’s best to put these tactics in place now, when you have control over the situation, rather than waiting until your employment becomes a problem.
Add an Additional Income Stream (or Two)
- It may be able to offer the additional funds required to implement the other solutions on this list.
- If you lose your job, the second income may serve as the foundation for your next principal source of income.
Creating a side hustle is one of the finest strategies to build additional revenue streams or at the very least a second income. In essence, this entails becoming self-employed. However, doing it as a side business makes the process much easier and less hazardous.
Consider any abilities you possess, especially if you employ them in your present or former jobs. However, you should also think about the abilities you employ in your daily life. Any one of those skills, or a combination of them, has the potential to be commercialized and turned into a lucrative side hustle.
It will take some time to get a side hustle off the ground and into a position where it can generate consistent income flow. That is why you should get started on this project right away.
Keep a Positive Mindset!
It’s impossible to dispute that worrying about your job while your stock portfolio plummets is unsettling. When confronted with a crisis, though, it is vital not to panic. The most effective approach to do this is to be deliberate in adopting and maintaining a positive mindset.
Don’t think of a downturn as the end of your career or your investing experience. Instead, think of it as a transitional period.
There’s a lot to be optimistic about in what may otherwise be a bleak situation:
- The downturn can help you get incentive to learn new job skills that can help you advance in your profession.
- You might now have the motivation to put that budget in place that you’ve been putting off over the protracted expansion.
Is there a recession going on right now?
In the first two quarters of 2020, the US economy was in recession for the first time. In the second quarter of this year, it increased by 6.7 percent over the previous quarter. However, according to a recent article by two well-known economists, GDP estimates might fall into negative territory for the rest of the year.
Is Canada headed for a recession in 2022?
In 2022, will the economy return to normal? In 2022, the Canadian economy, like the rest of the world, will continue to move from pandemic recovery-driven growth to more regular growth. However, the road back to normalcy will not be easy, and 2022 will be a year of transformation.
What will Canada’s population be in 2021?
From 2016 to 2021, Canada’s population rose at over double the rate of every other G7 countries, expanding 5.2 percent to just under 37 million people (see textbox Census counts, demographic estimates and census coverage studies).
Despite the fact that the pandemic halted Canada’s rapid population growth in 2020, it remained the fastest among the G7 countries.
Despite the fact that the pandemic hindered global migration, immigration helped Canada’s population increase by 0.4 percent in 2020, the fastest rate of growth in the G7 for comparable times. In comparison, between July 1, 2020 and July 1, 2021, the population of the United States increased by 0.1 percent.
Canada’s population growth from 2016 to 2021, like that of most other G7 countries, was mostly due to immigration, which accounted for approximately four-fifths of the rise, while natural increase accounted for one-fifth (that is, the number of births minus the number of deaths).
From 2016 to 2021, the rate of natural increase declined by 0.3 percent, to 0.1 percent, the lowest level on record. Unlike most other G7 countries, Canada’s natural increase is not predicted to reach negative (more deaths than births) during the next 50 years. Italy and Japan’s populations are already dropping as a result of more deaths than births and low immigration rates.
The epidemic, on the other hand, may have affected fertility rates as well as hindered the entry of immigrants from other countries. According to a recent research, one-fifth of Canadian adults under 50 wished to have fewer children than they had intended or postponed having children because of the pandemic. Prior to the pandemic, Canada’s fertility had been declining since 2015, with 1.4 children per woman reaching a new low in 2020.
From 2016 to 2021, Canada’s population growth ranked eighth in the G20, after Saudi Arabia, Australia, South Africa, Turkey, Indonesia, and Mexico, and equal to India.
What will the US GDP be in 2021?
In addition to updated fourth-quarter projections, today’s announcement includes revised third-quarter 2021 wages and salaries, personal taxes, and government social insurance contributions, all based on new data from the Bureau of Labor Statistics Quarterly Census of Employment and Wages program. Wages and wages climbed by $306.8 billion in the third quarter, up $27.7 billion from the previous estimate. With the addition of this new statistics, real gross domestic income is now anticipated to have climbed 6.4 percent in the third quarter, a 0.6 percentage point gain over the prior estimate.
GDP for 2021
In 2021, real GDP climbed by 5.7 percent, unchanged from the previous estimate (from the 2020 annual level to the 2021 annual level), compared to a 3.4 percent fall in 2020. (table 1). In 2021, all major components of real GDP increased, led by PCE, nonresidential fixed investment, exports, residential fixed investment, and private inventory investment. Imports have risen (table 2).
PCE increased as both products and services increased in value. “Other” nondurable items (including games and toys as well as medications), apparel and footwear, and recreational goods and automobiles were the major contributors within goods. Food services and accommodations, as well as health care, were the most significant contributors to services. Increases in equipment (dominated by information processing equipment) and intellectual property items (driven by software as well as research and development) partially offset a reduction in structures in nonresidential fixed investment (widespread across most categories). The rise in exports was due to an increase in products (mostly non-automotive capital goods), which was somewhat offset by a drop in services (led by travel as well as royalties and license fees). The increase in residential fixed investment was primarily due to the development of new single-family homes. An increase in wholesale commerce led to an increase in private inventory investment (mainly in durable goods industries).
In 2021, current-dollar GDP climbed by 10.1 percent (revised), or $2.10 trillion, to $23.00 trillion, compared to 2.2 percent, or $478.9 billion, in 2020. (tables 1 and 3).
In 2021, the price index for gross domestic purchases climbed 3.9 percent, which was unchanged from the previous forecast, compared to 1.2 percent in 2020. (table 4). Similarly, the PCE price index grew 3.9 percent, which was unchanged from the previous estimate, compared to a 1.2 percent gain. With food and energy prices excluded, the PCE price index grew 3.3 percent, unchanged from the previous estimate, compared to 1.4 percent.
Real GDP grew 5.6 (revised) percent from the fourth quarter of 2020 to the fourth quarter of 2021 (table 6), compared to a fall of 2.3 percent from the fourth quarter of 2019 to the fourth quarter of 2020.
From the fourth quarter of 2020 to the fourth quarter of 2021, the price index for gross domestic purchases climbed 5.6 percent (revised), compared to 1.4 percent from the fourth quarter of 2019 to the fourth quarter of 2020. The PCE price index grew 5.5 percent, unchanged from the previous estimate, versus a 1.2 percent increase. The PCE price index grew 4.6 percent excluding food and energy, which was unchanged from the previous estimate, compared to 1.4 percent.