All too often, people get the economy wrong. Most people think of the economy as something that revolves around money, which it does to an extent, but not entirely.
The thing about the economy is that it isn’t just made up of things like cars or houses, though those are important parts. It’s also made up of food, clothing, and other goods, along with technology and services such as going into businesses and serving customers.
All these things combine together to create what we call “economic activity.” When there is a lot of economic activity, we say the economy is thriving.
When it is very little, we say the economy is struggling. We can even identify when the economy is in a slump by looking at the numbers for economic activity.
Many times, people will talk about how much money there is in the country. They’ll mention how many homes there are or how much stock market investing goes on. These types of conversations usually focus more on how big a part of the economy the wealthy are.
However, this kind of talking head coverage of the economy is rather misleading. Because while the rich may make up a large percentage of the total amount of spending, they’re only spending a small portion of their income.
In fact, research shows that less than one percent of all spent money was done by high-income individuals.
The effects of the coronavirus on the economy
As mentioned earlier, during times like these people tend to pull back on spending. Many large corporations are also experiencing delays in payments as they suspend business operations or implement work-from-home policies.
This is especially true for companies that depend on customer traffic to make money, such as airlines, restaurants, and shopping sites. All three of those can suffer significant revenue drops due to cancellations and reduced footfall at their facilities.
Another area where we’ve seen some drag on the economy is tourism. With many countries around the world issuing travel warnings and restrictions, fewer people are traveling which means lower tourist revenues.
While this is unfortunate it will eventually give way to longer-term savings. In fact, investing in the health and wellness sector is one of the most profitable things you can do right now.
The downshift in economic growth is mainly due to a reduction in consumer spending
According to an article published by Business Insider, during the late 2000s housing market boom, wealthy individuals were able to spend heavily on expensive homes and luxury goods because they made enough money from their investments or salaries.
But this isn’t the case anymore. In fact, many people are struggling just to make ends meet every month. This has significant implications for the economy as a whole since consumers are one of the main drivers of economic activity.
When people don’t have much money to buy things, it can severely hurt the economy. Investments may remain locked up instead of being spent, which also cuts into future growth.
The effects of the coronavirus on the economy
As mentioned earlier, the spread of COVID-19 has had an incredible effect on our daily lives. This includes shutting down major parts of the economy, including work and school environments as well as recreational facilities and events.
Most people are able to stay at home during this time, which is great because it limits person-to-person contact. It also means that there aren’t many opportunities for people to gather and interact with each other, which is another reason why people are staying in houses more often.
This is truly an unprecedented situation we’re going through right now, so it’s natural to feel nervous about what comes next. On top of that, most areas have banned large gatherings, making it even harder to connect with others.
But all of these limitations can cause loneliness and depression. These feelings are totally normal and should be treated that way.
It’s important to recognize your emotions and how they’re affecting you. There are ways to deal with them, from practicing mindfulness to doing something you love to help focus your attention.
On days when you feel overwhelmed or hopeless, you may want to do something to take care of yourself physically or emotionally. You could make sure you eat enough food, exercise every day, and try to sleep as much as possible.
All of these things will contribute to helping you relax and feeling happier.
The government has stepped in to help small businesses
Since the beginning of the coronavirus outbreak, Congress has been working hard to make sure that people affected by this health crisis have what they need to survive. They’ve also worked tirelessly to ensure the economy doesn’t completely shut down due to a lack of business.
One of the main ways it has done this is through an initiative called the Paycheck Protection Program (PPP). This program offers very low-interest loans to businesses so they can keep running during these times.
There are some restrictions to getting a PPP loan, such as having at least one full-time employee or being actively seeking employment, but most lenders don’t ask about those things when applying. Rather, they focus more on proof that the company will be back around soon.
Since March 6th, over 15 million dollars have gone towards funding nearly 5 million individual loans for almost every industry you could think of. These include things like buying equipment, paying employees, and supporting their families while they’re out of work.
The effects of the coronavirus on the economy
As mentioned earlier, during times of health crises like this one, people are typically on edge emotionally as well as physically. People become more stressed out and need additional sleep to deal with all the new information they have.
Businesses experience a drop in activity due to concerns about individual safety or lack of resources such as masks and disinfectant products.
Overall demand drops as people stay home and consume fewer goods and services. This is how economies suffer in the short term when there are significant disruptions.
However, longer-term these gaps can be filled if individuals remain healthy and companies re-evaluate their use of resources.
The overall effect is an extended slump that eases over time as people return to normal activities and businesses restore some of their former efficiency.
The country is still in a strong economic position
Even with growing concerns about the state of the economy, we are not at risk of a recession. Sure, things have slowed down quite a bit since the spring, but that’s because we entered an extended period of growth back in December.
Since then, the economy has experienced two more quarters of healthy expansion — one in Q2 and one in Q3 so far this year. We also had our strongest March employment numbers in years earlier this month.
More than 15 million new jobs have been created since the Great Recession officially ended in 2009, which means there is currently just over 50 percent as many unemployed people as there were back during the downturn.
And while business investment has fallen off considerably since early 2014, it’s actually up slightly from where it was last fall. That’s important to note because investment drives productivity – how much you produce per hour spent – and productivity determines whether or not your income grows in line with what you’re paid.
Economic conditions are expected to improve
A strong economy is one of the key reasons why most people in America can enjoy their lives right now, living beyond their means is no longer fashionable.
We’ve seen this before! Following World War II, many countries experienced what was called an ‘economic miracle. They were able to spend money like there was no end in sight because they enjoyed cheap, abundant energy.
And while it may not seem like it today, things back then weren’t quite as stable either. Energy shortages led nations to hoard supplies, which created inflation. And when people wanted to buy goods, they had to pay more due to excess supply.
But once energy prices started rising again, people re-spent their money, creating a snowball effect that ended with everyone enjoying high-quality economies!
Today we’re experiencing just such an environment. According to the International Monetary Fund (IMF), our nation will experience low unemployment and growth for at least another two years.
The effects of the coronavirus on the economy
As mentioned earlier, during times like these we are in it is important to have an understanding of what’s happening around you. With the recent outbreak of COVID-19 here in the United States, people are staying home due to fears of getting sick.
This is having an effect on many different areas of our lives. Workplaces are closed down, stores are experiencing a drop off in sales, and events such as March Madness have been canceled or postponed.
All of this adds up to us not being able to go out as much which has a negative impact on our overall level of happiness.
More importantly, though, it can have a lasting effect on the economy.
The more people that are spending money and going out, the higher the demand for things such as food, clothes, and shelter. If all those demands stop, then the supply drops too. This creates a situation where there isn’t enough of something to meet the need.
Stagnant supplies make it harder to get needed goods so some people may be forced to either break social norms and go without or find ways to produce their own supplies.
