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.
In 2021, will the United States be in a recession?
Last year, the US economy increased at its quickest rate since Ronald Reagan’s administration, coming back with tenacity from the coronavirus recession of 2020.
Is the US economy currently experiencing a downturn?
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 America experiencing a downturn?
The United States is officially in a downturn. With unemployment at levels not seen since the Great Depression the greatest economic slump in the history of the industrialized world some may be asking if the country will fall into a depression, and if so, what it will take to do so.
What is the state of the economy in 2022?
According to the Conference Board, real GDP growth in the United States would drop to 1.7 percent (quarter-over-quarter, annualized rate) in Q1 2022, down from 7.0 percent in Q4 2021. In 2022, annual growth is expected to be 3.0%. (year-over-year).
What is the state of the economy in 2021?
“While Omicron will slow growth in the first quarter, activity is projected to pick up nicely once the newest pandemic wave has passed and supply-chain issues have been resolved,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto.
“As it navigates underlying economic strength, rising labor shortages, and stubbornly high inflation, the Fed will need to remain ‘humble and flexible.'”
The economy increased at its fastest rate since 1984 in 2021, with the government providing roughly $6 trillion in epidemic relief. In 2020, it shrank by 3.4 percent, the most in 74 years.
President Joe Biden swiftly claimed credit for the outstanding performance, calling it “no accident.”
After Congress failed to approve his key $1.75 trillion Build Back Better legislation, Biden’s popularity is declining amid a stalled domestic economic plan.
In a statement, Biden said, “We are finally building an American economy for the twenty-first century, and I urge Congress to keep this momentum going by passing legislation to make America more competitive, strengthen our supply chains, strengthen our manufacturing and innovation, invest in our families and clean energy, and lower kitchen table costs.”
According to the government’s advance GDP estimate, gross domestic product increased at a 6.9% annualized pace in the fourth quarter. This follows a third-quarter growth rate of 2.3 percent.
However, by December, the impetus had dissipated due to an assault of COVID-19 infections, spurred by the Omicron variety, which contributed to lower expenditure and disruption at factories and service organizations. However, there are hints that infections have peaked, which could mean a surge in service demand by spring.
Inventory investment surged by $173.5 billion, accounting for 4.90 percentage points of GDP growth, the highest level since the third quarter of 2020. Since the first quarter of 2021, businesses have started reducing inventories.
During the epidemic, people’s spending shifted from services to products, putting a strain on supply systems. GDP rose at a sluggish 1.9 percent rate, excluding inventories.
On Wall Street, stocks were trading higher. Against a basket of currencies, the dollar rose. Treasury yields in the United States have fallen.
The minor increase in so-called final sales was interpreted by some economists as a sign that the economy was about to decline severely, especially if not all of the inventory accumulation was planned. They were also concerned that rate hikes and diminished government aid, particularly the elimination of the childcare tax credit, would dampen demand.
“Fed policymakers will have to tread carefully when raising interest rates,” said Christopher Rupkey, chief economist at FWDBONDS in New York. “Every other Federal Reserve in history has raised interest rates too high and brought the economy crashing back down.”
Last quarter’s growth was also boosted by a surge in consumer spending in October, before falling sharply as Omicron raged. Consumer expenditure, which accounts for more than two-thirds of GDP, increased by 3.3 percent in the fourth quarter after increasing by 2.0 percent in the previous quarter.
Increases in spending on healthcare, membership clubs, sports centers, parks, theaters, and museums balance a decline in purchases of motor vehicles, which are scarce due to a global semiconductor shortage.
Inflation rose at a 6.9% annual pace, the fastest since the second quarter of 1981, far beyond the Federal Reserve’s target of 2%. As a result, the amount of money available to households fell by 5.8%, limiting consumer expenditure.
Households were still buffered by large savings, which totaled $1.34 trillion. Wages increased by 8.9% before accounting for inflation, indicating that the labor market is experiencing a severe labor shortage, with 10.6 million job opportunities at the end of November.
Though the job market slowed in early January as Omicron rose, it is now at or near full employment. Initial jobless claims fell 30,000 to a seasonally adjusted 260,000 in the week ending Jan. 22, according to a second Labor Department report released on Thursday.
Claims decreased dramatically in Illinois, Kentucky, Texas, New Jersey, New York, and Pennsylvania.
Last quarter’s GDP growth was aided by a resurgence in corporate equipment spending. Government spending, on the other hand, has decreased at the federal, state, and municipal levels.
After being a drag on GDP growth for five quarters, trade made no contribution, while homebuilding investment fell for the third quarter in a row. Expensive building materials are constraining the sector, resulting in a record backlog of homes yet to be built.
Despite the economy’s difficulties at the start of the year, most experts predict the good luck will continue. This year’s growth forecasts are at least 4%.
“This year, the economy could be even better,” said Scott Hoyt, a senior economist with Moody’s Analytics in West Chester, Pennsylvania. “The economy will stagnate, and monthly employment increases will fall short of last year’s high levels. Nonetheless, by the end of the year, the economy should be close to full employment and inflation should be close to the Fed’s target.”
(Paragraph 7 was removed from this story because it contained incorrect information.)
What is the state of the US economy right now?
Following a 2.3 percent gain in the third quarter, real gross domestic product (GDP) expanded at a 6.9% annual rate in the fourth quarter of 2021. The rise was lowered down 0.1 percentage point from the February “second” estimate. Inventory investment, upturns in exports and residential fixed investment, and an acceleration in consumer spending all contributed to the fourth-quarter acceleration. COVID-19 instances resulted in continuous restrictions and disruptions in the functioning of enterprises in several parts of the country throughout the fourth quarter. As sections of numerous federal programs expired or tapered off, government aid payments in the form of forgiving loans to enterprises, grants to state and local governments, and social benefits to households all reduced.
In 2021, where are we in the business cycle?
The US industrial economy is in Phase D, Recession, based on the current position of the 12/12 rate-of-change, which comes as no surprise. Today, however, I’d like to concentrate on where we’re going rather than where we’ve been.
Although the Production 12/12 has yet to reach a low, the 3/12 is growing and has overtaken the 12/12. This positive ITR Checking PointTM indicates that a shift to 12/12 increase and a new business cycle phase is approaching.
As we approach 2021, we estimate that US Industrial Production will enter Phase A, Recovery. This business cycle phase will most likely represent the first half of the year before the next transition, and Phase B, Accelerating Growth, will describe the rest of 2021.
While it is critical to comprehend what lies ahead, it is also critical that we take the necessary steps. We have strategies based on the approaching phases at ITR for you to consider. They’re known as Management ObjectivesTM. Here are a few examples, all of which were created expressly for the upcoming phases:
Is the economy back on track after Covid?
Economic growth has outperformed consensus predictions made at the start of the pandemic when the economy touched bottom in the second quarter of 2020. As a result, real GDP topped its pre-pandemic level in the second quarter of 2021. With the ongoing effects of the fiscal stimulus passed by Congress in 2020 and 2021, pent-up demand from consumers for face-to-face services, and labor market and asset price strength, real GDP appears on track to rise at a rapid pace of around 6% in 2021. To be sure, the Delta variation puts that projection in jeopardy. Consumer purchasing and general economic activity were impressively robust even in the early phases of the epidemic, when people had significantly less information and mitigating tools.
The CBO’s upward revisions to its predictions reflect the surprise strength of the economy and the improvement in expectations (shown in figure 1). The amount of GDP in the third quarter of 2020 was 4.8 percent higher than the CBO’s prediction at the start of the quarter. Furthermore, since July 2020, the CBO has revised up estimated GDP for 2023 by roughly 7%, resulting in a projected GDP level for the end of 2023 that is now 2% higher than the pre-pandemic forecast. Nonetheless, the cumulative deficit in real production compared to pre-pandemic projections is anticipated to be around $400 billion in 2012 dollars by 2023. (CBO 2020a, 2021c). It’s worth noting that the CBO’s predictions show a soft landing, with real GDP only growing modestly by late 2022. It’s possible that the slowdown may be more abrupt and unpleasant than those estimates suggest.
Fact 2: The sharp decline in employment in spring 2020, which was largely concentrated in the services sector, has only partially reversed.
Figure 2 depicts the percent change in overall employment from the peak month preceding recent economic downturns to the month when employment returned to its previous business cycle high. Across the job market, employment is still 5.3 million lower than it was in February 2020, and nearly 9 million lower than it was before the outbreak.
Employment reductions in the leisure and hospitality sector accounted for nearly 40% of the total 22 million jobs lost from February to April 2020. In contrast, since then, a partial rebound in that industry has supported employment growth. Monthly employment increased by more than 700,000 on average from February to July of this year. However, in August, the pace slowed substantially. The pandemic’s comeback certainly slowed the rebound in the leisure and hospitality industry, which had no net job gains in August. Employment in that sector is still down 1.7 million jobs since February 2020.
In comparison to past recessions, the COVID-19 recession has been particularly harsh for the services sector. Consider the average outcomes of the four recessions from 1981 to 2019, 18 months after they began: employment in the service sector was 1% lower than it had been before the recession, while employment in the goods sector was 10% lower. In comparison, employment in the service sector was still 4% lower in August 2021 than it was in February 2020, while employment in the products sector was 3% lower.
Fact 3: Millions of workers are no longer eligible for Unemployment Insurance.
In certain areas, enhanced UI will expire in the summer of 2021, whereas in others, it will end in the first week of September 2021. That set of regulations dramatically boosted eligibility for workers who were not eligible for regular UI (Pandemic Unemployment Assistance), increased the amount of weeks a worker may receive UI (Pandemic Emergency Unemployment Compensation), and raised the generosity of benefits (Federal Pandemic Unemployment Compensation ). Only 30% of workers were eligible for unemployment compensation prior to the CARES Act, which established PUA, PEUC, and FPUC.
Weekly ongoing UI claims for standard UI benefits and Extended Benefits, which automatically extends weeks of eligibility based on a state’s economic situation, as well as claims for emergency programs: PUA and PEUC, are superimposed on the total number of unemployed workers in Figure 3.
It’s worth noting that the unemployment rate drastically underestimates the number of people who lost their jobs as a result of the outbreak. A person must be actively looking for employment to be classified as legally jobless; yet, millions of people have essentially exited the labor force since March 2020 and were eligible for the extended UI benefits. There was a gap of more than 5.5 million workers in the job market who were unemployed but not receiving UI after the emergency programs expired. We expect the difference to narrow just little by the end of the year.
Fact 4: The number of job openings and the number of workers quitting their jobs is higher now than in the past 20 years.
Despite the fact that job vacancies are at their greatest level since the end of 2000 (the most recent statistics available), many factors are limiting employment growth. One factor is that the number of people quitting their jobs each month has reached an all-time high. Because workers are more inclined to switch occupations in a strong labor market, the quit rate often changes with the job opening rate, as seen in Figure 4. Furthermore, the mix of labor demand is shifting in the current context, and workers may be taking time off from temporary positions taken during the pandemic. Record job openings, sluggish job matching, and low labor force participation have all combined to put downward wage pressure on workers, especially those in the service industry, younger workers, and those with less formal education.
Aside from the low rate of job matching, the lack of improvement in the labor force participation rate, which is the percentage of the population that works or is actively looking for employment, is also concerning. Between February and April of last year, when roughly 8 million people exited the workforce, this figure plummeted from 63 percent to 60 percent. By June 2020, the participation rate had regained almost halfway, but has remained stubbornly low since then.
Fact 5: Even with recent jumps in inflation, lower income workers are seeing increases in real wages.
Wage inflation has been excellent news, especially for low-wage workers and those in certain industries. Wages in the bottom quartile of the wage distribution are risen 7.0 percent from pre-pandemic levels, or 4.6 percent annually, as illustrated in figure 5. That rate of growth is comparable to what that group saw in 2019, when the job market was thought to be relatively tight. Wage growth has been particularly substantial in several industries. For example, average hourly earnings in the leisure and hospitality sector have increased nearly twice as fast as the total private industry average over the last 12 months. Retail commerce, transportation and warehousing, and financial operations are all enjoying considerable increases in hourly earnings.
Workers’ purchasing power is not increasing as quickly as nominal salaries due to recent increases in the rate of inflation. From March to June 2021, actual wages fell as a result of recent price hikes. These decreases somewhat offset increases in real wages for wage earners in the bottom quartile early in the epidemic, when inflation was low and nominal wages were rising. Real wages for that group accelerated considerably in July and August. Overall, real earnings for the poorest quartile increased by 2.4 percent, or 1.6 percent per year, from February 2020 to August 2021. This is significantly lower than the 2.4 percent annual rate of real pay growth seen in the bottom quartile in 2019. Furthermore, in contrast to a 0.8 percent increase in 2019, actual salaries for individuals in the top quartile are essentially unchanged.
Fact 6: Post-pandemic, income after government taxes and transfers, as well as household saving, have been above their recent trends.
In 2020 and thus far in 2021, disposable personal income (DPI, or total aftertax income) was larger than it would have been if DPI had merely grown at its five-year trend rate. Since the beginning of the epidemic, DPI has been higher than trend by a total of $1.4 trillion.
Household savings have risen as a result of huge increases in DPI and constrained services spending during the pandemic. From March 2020 through April this year, the rate of saving was larger than it had been in the previous four decades in every month; in some months, it was nearly double the record postWorld War II peak. In total, households had $2.5 trillion more in savings than they would have had DPI and spending risen at trend rates in the five years before to the pandemic. Furthermore, property and stock market prices have risen dramatically, resulting in significant gains in household wealth. Those funds will be used to fund the unmet demand for foregone spending. Households will eventually see increased savings and wealth as financial resources to sustain long-term, reasonably consistent consumer expenditure.
Fact 7: Fiscal support led to a reduction in poverty in 2020.
Poverty climbed from 10.5 percent to 11.4 percent between 2019 and 2020, according to the Official Poverty Measure (OPM). The percentage of the US population living in poverty, as assessed by the Supplemental Poverty Measure (SPM), decreased from 12 percent to 9 percent in 2020 after accounting for the massive economic support offered to households (figure 7). While SPM-measured poverty is normally lower than OPM for children, SPM-measured poverty was lower than OPM for the first time in 2020.
The increase of unemployment compensation and checks to households were the two policies that had the most substantial effects in comparison to previous years since they were the most different from previous policy. SPM poverty would have grown to 12.7 percent instead of declining to 9.1 percent if Congress had not enacted relief for families.
Another factor contributing to the reduction in poverty was the relatively significant salary growth seen by those at the bottom of the income distribution who stayed working (see fact 5). Those salary increases followed robust wage growth in 2018 and 2019, when the tight labor market favored lower-paid workers.
In 2021, ongoing fiscal supportparticularly full refundability and increases in the child tax credit, as well as increases in the maximum benefit of the Supplemental Nutrition Assistance Program (SNAP)along with continued labor market recovery should help to pull households out of poverty. Making permanent some of the actions undertaken to combat the COVID-19 recession will allow for sustained progress in lowering post-tax-and-transfer poverty as assessed by the SPM.
Fact 8: To date, 36 states have made progress in catching up on delinquent rent and mortgage payments.
In the spring of 2020, politicians put in place numerous relief programs to assist Americans struggling to make mortgage and rent payments in the midst of a significant contraction in labor income. These initiatives began with foreclosure and eviction moratoria and eventually expanded to include financial assistance.
Delinquent mortgage borrowers who had a federally backed mortgage, which includes mortgages backed by the Federal Housing Administration, Veterans Administration, Fannie Mae, and Freddie Mac, and were experiencing economic hardships as a result of the pandemic, were automatically eligible for forbearance through September 30, 2021. Mortgage servicers, who are generally required to make payments to investors regardless of whether borrowers are delinquent, have received assistance from the government. According to the Federal Reserve Bank of New York, forbearance plans disproportionately benefited low-income borrowers, particularly those with FHA-insured loans and those who lived in low-income areas (Haughwout, Lee, Scally, and van der Klaauw 2021). In addition, the American Rescue Plan, enacted by Congress, offered over $10 billion to homeowners who were behind on their mortgage and utility payments.
Although some states have extended such safeguards, the federal eviction moratorium expired in August 2021. The federal government has set aside $46.5 billion to assist renters in making back payments as well as landlords who are owed those payments. Even with recent US Department of the Treasury (2021) recommendations to speed delivery, state and local grantees had only provided $5.1 billion of the first $25 billion allotted for emergency rental assistance through July 2021, according to news reports (Siegel 2021). More than 60% of households receiving aid in the first quarter of 2021 had household incomes that were less than 30% of typical incomes in their geographic area.
Nonetheless, stronger fiscal support and a partial labor market recovery have contributed to a reduction in the number of persons who are behind on their payments. From each state’s high to the most recent data spanning July and August, Figure 8 indicates how much progress has been made in catching up on rent or mortgage payments. Between December 2020 and March 2021, three-quarters of states experienced their greatest rate of missed rent or mortgage payments. Since peaking, the percentage of residents reporting missed rent or mortgage payments has decreased by statistically significant levels in 36 states.
Fact 9: The strength in durable goods spending and weakness in spending on consumer services stands in sharp contrast to previous recoveries.
Together, social alienation and strong government support for households resulted in a boom in durable goods spending while households cut back on services spendinga marked deviation from typical recession behavior. Overall real spending on goods fell 13% from February to April 2020, as shown in figure 9a, but quickly recovered and had surpassed its pre-pandemic level by June. Vehicles, household furniture, and leisure equipment were among the items purchased in 2021; after accounting for inflation, purchases of those durable goods had averaged 25% greater than pre-pandemic spending. During the pandemic, however, spending on servicesmany of which were face-to-face transactions like live entertainment and dining at restaurantsfell sharply. In the spring of 2020, real services spending fell by more than 20%, and it has yet to rebound to pre-pandemic levels.
These trends differ from those seen in previous recessions. During most previous recessions, spending on durable goods remained depressed for an extended period, as in the case of the Great Recession, when goods expenditures were 7% below their pre-recession peak 18 months after the recovery began. Furthermore, as shown in Figure 9b, expenditure on services momentarily plateaued in the first year of recovery in each of the previous three recessions before resuming increase. However, in none of these previous recessions did services fall below their pre-recession levels for an extended length of time, highlighting the COVID-19 recession’s distinctiveness.
As individuals resume routine activities, demand has shifted back toward services in recent months. From March to July, goods purchases fell slightly, while service spending surged by 3%; in particular, expenditure on live entertainment, hotels, and public transportation increased by 35% in those four months.
Fact 10: Retail inventories are unsustainably low.
Much of the consumer demand for goods has been fulfilled by inventory drawdowns through August 2021. The retail inventory-to-sales ratio increased at the start of the epidemic, when spending plunged, as seen in figure 10. However, the ratio has dropped dramatically since then. This is especially true in the car industry, where chip shortages have hampered manufacturing. Production has been insufficient to meet demand even outside of that sector. Orders that haven’t been filled and delivery times that haven’t been met are on the rise across the manufacturing industry. Disruptions in global supply chains have been a persistent stumbling block, particularly backlogs at ports, which have driven up shipping costs to historic highs.
On the one hand, manufacturing capacity utilization has nearly restored to pre-pandemic levels. On the other hand, historical patterns and recent manufacturer surveys imply that once demand returns, manufacturers will expand utilization well beyond that level to replenish stockpiles.
In addition to inventory investments, survey data suggests that capacity and productivity investments are on the rise. Since the second quarter of 2020, private investment in equipment and structures has partially recovered, but has not yet restored to pre-pandemic levels. Investment in business equipment had recovered as a share of potential output as of the first quarter of 2021, although more investment is needed to make up for lost investment during the epidemic. Investment in residential structures has more than compensated for a resurgence in structure investment; in fact, residential structure investment as a percentage of output has returned to levels not seen since 2007. Nonresidential structural investment, on the other hand, continues to fall as a percentage of potential output.
Fact 11: There were more new business applications and fewer bankruptcies in 2020 and 2021 than in 2018 and 2019.
Newly formed firms appear to be a significant source of the goods and services that families require. Figure 11a depicts new business applications from enterprises classified by the Census Bureau as having a high proclivity to hire people. Since the agency began tracking the series in 2004, we have seen the highest amount of applications since the summer of 2020. In the aftermath of the pandemic, applications may have indicated new commercial prospects. The increase in total new applications is concentrated in online retail, which accounts for a third of all new applications, and service sector companies, which saw some of the worst job losses early last year (Haltiwanger 2021).
Due in part to financial support like the Paycheck Protection Program, which granted forgiven loans to small and medium-sized enterprises, fewer businesses have collapsed in the last year and a half than had been expected. In Figure 11b, the total number of commercial bankruptcies during the last four years is compared. In total, there were 17% fewer bankruptcies in 2020 than in 2019, and 2021 is on course to have the fewest commercial bankruptcy filings since at least 2012. (when the data became available). In particular, Chapter 7 and Chapter 13 filings, which reflect asset liquidation and sole proprietorships, respectively, were 16 percent and 45 percent lower in 2020 than in 2019. In contrast, Chapter 11 filings, which have generally reflected large-firm reorganizations, increased by 29% in 2020. That increase is also likely due to laws passed in February 2020 and then expanded through the CARES Act, which let smaller businesses to restructure under Chapter 11 and thus stay in operation.
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.
What happens if we enter a downturn?
People from various economic origins will feel the effects of a recession in various ways. There will be an increase in unemployment, a decrease in GDP, and a decline in the stock market. A recession, on the other hand, could be far more damaging to an unemployed single mother of two than it would be to a young, employed professional with no dependents.
Whatever your circumstances, there are a few things you should be aware of in order to prepare for the next economic slump.
How Can You Mitigate Potential Loss?
Recessions might be frightening, but it’s critical to maintain your composure. Mitch Goldberg, the president of an investing firm, urged not to make hurried judgments in an interview with CNBC shortly after the inverted yield curve in mid-August 2020.
“Don’t panic,” Goldberg advised, “and don’t make hasty financial and investing decisions.”
If you’re worried about a recession and think your short-term investments won’t make it through, consider moving part of your money to long-term CDs, high-yield savings accounts, or just cash. However, a well-diversified long-term investment portfolio should be able to withstand both bull and bear markets.
What Does a Recession Mean for Your Employment?
Unemployment grows during a recession. As a result, the next recession will have an impact on some segments of the workforce. It’s impossible to predict if you’ll lose your job during a recession. It’s a good idea to take a look at:
Examine your current position with a critical eye. It might not be a bad idea to clean up your CV just in case, depending on your situation. Also, it’s always a good idea to do everything you can to make yourself indispensable and broaden your skill set. When you’re functioning at your best, regardless of the economy, it’s a win-win situation for you and your company.
Even if you work in one of the industries severely afflicted by the coronavirus, finding a new employment can be difficult, especially if you’re between the ages of 16 and 24. While certain businesses may never recover to pre-pandemic levels, other employment types have seen an upsurge in demand.
What Does It Mean for Your Investments and Retirement Funds?
Learn from a major blunder made by some investors during the Great Recession: selling their equities while they were falling in value. Recessions and bear markets should already be factored into your long-term investment strategy. If you keep your investments for a long time, they will ultimately recover and become more valuable. The same can be said for your retirement savings.
During your career, you should anticipate to face a recession. There have been more than 30 recessions in the last 165 years. Statistically, you’ll most likely have more than one while building your retirement savings.