Experts say we're headed for a recession. Here's what that means for you - CNET

ponjotor.blogspot.com

As money gets tighter for millions across the country, some are predicting a recession.

Angela Lang/CNET

For the most up-to-date news and information about the coronavirus pandemic, visit the WHO website.

The US economy has suffered a massive decline in reaction to the coronavirus pandemic, shrinking almost 5% in the first quarter of 2020 and signaling what many experts are predicting will be the worst economic recession "in our lifetime." Comparisons to the Great Depression of the 1930s abound, and the European Union is predicting the worst recession in the EU's history. But what do "recession" and "economic depression" even really mean -- for the economy as well as your own pocketbook?

Layoffs continue to push as many as 22 million US workers into unemployment while companies, too, are beginning to suffer. Even if you haven't personally been affected, you may be starting to worry. That's why it's important to know what's really going on. How we define the growing economic crisis affects how we respond to it, from government leaders and bank CEOs down to individuals like you and me. 

CNET Coronavirus Update

Keep track of the coronavirus pandemic.

To help put the current economic climate into perspective, here's a look at what financial experts typically mean when they use terminology like "recession" and "depression," as well as what you can do to support yourself, your community and the national and global economies during this trying time.

The key difference between a recession and an economic depression is time: recessions are a minimum of six months, whereas depressions go on for years.

Angela Lang/CNET

Recession vs. depression: What's the difference?

Recession: Most experts agree that a recession happens when the economy shrinks for at least two fiscal quarters in a row -- in other words, six months. This is measured by gross national product, or GDP, which is a number that represents the total value of goods and services produced within a country -- every car built, every hamburger sold, every lawn mowed and so on. A recession, then, is a period of at least six months when that number goes down instead of up. When GDP climbs back to prerecession levels, the recession is over.

Depression: A depression is far more uncommon and longer lasting. For example, in the last 166 years, there have been 33 recessions and only one depression. Think of a depression as two or more recessions linked together with no economic recovery in between. The Great Depression of the 1930s is the most recent and well-known example. Economic depressions last years as opposed to months.

Now playing: Watch this: How to file a tax extension during the COVID-19 pandemic

1:37

The take-home lesson here is that a recession can't be defined until at least half a year has passed, and a depression can almost never be identified until after it's happened. 

So, what do we call the not-so-great economic state that we're in? What can the government do to fix it? Or individuals? And where do you go if you need financial help?

Let's zoom in on the current crisis and take a look.

New movie calendar for 2020 and 2021 following coronavirus delays

See all photos

What's our current economic situation?

Technically, we're in an economic downturn right now, but that could change. Economic downturns are a normal, regular part of a healthy economy that ebbs and flows, with periods of growth followed by periods of contraction.

What makes this downturn different is that it's caused by the coronavirus, through the closure of nonessential businesses and high unemployment -- not through a natural economic shift or cycle. Until it's considered safe enough to open businesses and factories, the economic conditions are expected to worsen. 

A leveling off of the pandemic by either a SARS-CoV-2 vaccine or an effective treatment for COVID-19 (or both) may be the most obvious solution, and that will take time.

The US government will inject $2 trillion into the economy over the coming months in an effort to stave off a recession, including sending up to $1,200 checks to individuals.

Angela Lang/CNET

How the government is trying to bolster the economy and avoid recession

The recent $2 trillion stimulus package represents the US government's first attempt at thwarting a recession, but we won't be able to measure its impact for some time. The economic relief law includes stimulus payments of up to $1,200 for most US taxpayers, as well as a loan program for businesses to be able to keep paying their employees.

The Federal Reserve recently indicated it will continue to hold interest rates close to 0% for the foreseeable future, which often has the effect of encouraging more borrowing, which leads to more spending, and that generally improves the economy.

Now playing: Watch this: Coronavirus stimulus checks: Everything you need to know

2:06

Finally, doctors and scientists are racing to develop either a SARS-CoV-2 vaccine, a COVID-19 treatment or both. Human trials of a potential vaccine are slated to begin in mid-May, but it may still be another year or longer before anything is approved for widespread use.

Buying gift cards from local businesses can help keep them afloat while they're closed down.

Jessica Dolcourt/CNET

What can I do to help out?

It's easy to feel helpless, but there are ways to make a difference. My CNET colleague Katie Conner has some excellent recommendations for things you can do to help your local community and businesses, including no-cost contributions like online volunteering or donating blood, as well as ordering take-out or delivery, and buying restaurant gift cards. 

Other local businesses like bookstores, gardening centers, toy shops and boutiques may have a website where you can order and possibly even save on shipping costs by picking up curbside.

The best advice I've heard so far about how you can individually help prop up the economy is this: Spend to the best of your ability and within your means.

Fighting coronavirus: COVID-19 tests, vaccine research, masks, ventilators and more

See all photos

What if I need help?

If you've suffered financial hardship as a result of the coronavirus pandemic, here are some resources you can turn to for help:

Let's block ads! (Why?)

Business - Latest - Google News
May 07, 2020 at 07:55PM
https://ift.tt/3cd3V6E

Experts say we're headed for a recession. Here's what that means for you - CNET
Business - Latest - Google News
https://ift.tt/2Rx7A4Y


Bagikan Berita Ini