The US economy has suffered a decline in the response to thefalling nearly 5% in the first quarter of 2020, signaling what many experts predict will be the worst economic recession "during our comparisons with the Great Depression of the 1930s abound, and the EU predicts the worst recession in EU history.
Resignations continue to push as many as 33 million American workers into unemployment, while. Even if you have not personally suffered, you may start to worry. That is why it is important to know the terminology. What does "recession" and "economic depression" even mean – for the economy as well as for your own pocketbook? How we define the growing economic crisis affects how we respond to it, from government leaders and bank executives to individuals like you and me.
To help put the current economic climate into perspective, we give a look at what financial experts usually mean when they use terminology such as "recession" and "depression". Read on forand during this trying time. Note that this story is intended to provide an informative overview, not to act as financial advice. It is often updated as the situation develops.
What is our current financial situation?
Technically, what we are currently experiencing is an economic downturn, but with a financial quarter negative economic growth already under our belt, we are only a few months away from what can blossom into a bona fide recession (continue reading for full definition). Economic downturns can be a normal, regular part of a healthy economy that ebbs and flows, with periods of growth followed by periods of contraction.
What makes this decline different, however, is that it is caused by our response to the coronavirus pandemic and not the result of a natural economic change or cycle.the closure of non-important companies and the rapidly rising unemployment have led to reduced consumption expenditure in almost all categories except food.
Equalization of the pandemic by either a SARS-CoV-2 vaccine or an effective treatment for(or both) may be the most obvious solution, . While states and countries some analysts predict a rapid reversal of current downward economic developments as a result of business resumption and the abolition of residency restrictions.
Recession versus depression: What is the difference?
Recession : Most experts agree that a recession occurs when the economy shrinks in at least two fiscal districts in a row – in other words, six months. This is measured by the gross domestic product, or GDP, which is a number that represents the total value of goods and services produced in a country – every car being built, every burger sold, every lawn and so on. A recession is thus a period of at least six months when that number drops instead of upwards. When GDP climbs back to pre-crisis levels, the recession is over.
Depression : A depression is much more uncommon and lasts longer. For example, the last 166 years have been 33 recessions and only one depression. Think of a depression that two or more recessions linked to without economic recovery in between. The Great Depression of the 1930s is the latest and well-known example. Economic recesses last year as opposed to months.
How the government tries to strengthen the economy and avoid the recession
adopted as part of the CARES Act in March represents the US government's first attempt to counter a recession, but we will not to be able to measure its impact over time. The Financial Relief Act contains for most US taxpayers, as well as a loan program for companies to continue to pay their employees.
The Federal Reserve recently indicated that it will continue to hold interest rates close to 0% for the foreseeable future, often affecting more borrowing, leading to more spending, and generally improving the economy. There is even talk of a second round of stimulus fundingalthough it is too early for it to develop in one way or another. Finally, doctors and researchers are competing to develop either a SARS-CoV-2 vaccine, a COVID-19 treatment, or both. Human trials of a potential vaccine are scheduled to begin in mid-May, but it may still be a year or longer before something is approved for widespread use. The development of a vaccine against coronavirus is rapid and the details change daily.
What can I do to help?
It's easy to feel helpless, but if you feel financially secure or have time to give, there are ways to make a difference. My CNET colleague Katie Conner has some excellent recommendations forincluding free grants such as volunteering online or donating blood, as well as ordering donations or deliveries, and purchasing gift cards for restaurant.
Other local businesses such as bookstores, garden centers, toy stores and stores may have a website where you can support them with a sidewalk command, if they remain closed.
The best advice I have heard so far on how you can individually help promote the economy is this: Spend to the best of your ability and within your means.
What if I need help?
If you have suffered financially as a result of the coronavirus pandemic, here are some resources you can turn to for help:
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