The worst financial dip since the financial crisis resulted due to shutdowns across the world. The pandemic originated from the Hubei region, China with the first case reported on December 31st, 2019. The damages of the coronavirus were not limited to the number of lives lost but the financial impact it had on countless individuals. The economy was already on a slippery slope downward before the lockdowns as a majority of the largest economies were highly dependent on debt. With the growing tensions between China and the United States in a trade war during 2018-early 2020, there was a “mild recession” for the US manufacturing industry prior to the discovery of the novel disease.
Let’s also not forget that the United Kingdom was making preparations for Brexit, the withdrawal from the European Union. With all of these world events and the major economies under stress, in the early 2020’s, the world was undergoing economic stagnation and significant consumer downturn. Many economists believed that a recession was inevitable.
With the rapid spread of the COVID-19 disease, there were numerous lockdowns initiated to stop the spread. The lockdowns collapsed various industries and laid off numerous workers all at once to strain the economy further thus causing a stock market crash. The market was extremely volatile in early March with large swings downward. The economy was impacted not only in the stock markets but with high unemployment, low manufacturing sales and the release of several government benefits to address the gaps between income and expenses.
The United States has the largest national fiscal response of $2900billion, which is approximately 14.5% of GDP. The pandemic has shaken up the ranking of the world’s largest economies after several countries underwent their worst economic recessions in recent history. Brazil used to be in the top 10 world’s biggest economies and post pandemic has dropped out of the rank and South Korea has filled it’s spot.
The economy was able to recover due to the large amount of money provided by the governments and the financial institutions assistance in providing wiggle room for consumers that could not afford to pay expenses (i.e. mortgage payments). The North American markets also saw the rise of investors as more folks with excess income entered the low-cost or commission-free trading platforms. This led to an increase in investing in stocks without studying financial fundamentals and large amounts of investment in “meme stocks.” In essence, with the government funding and excess income of those who remained employed, the economy was able to cling on to dear life.
You might be wondering what you can do to remain financially secure during the remaining time in the pandemic, here’s some tips.
Tips for financially surviving a Pandemic
- Save approximately 3 months of savings as an emergency fund in a savings account or easy access account.
- This will help you if there are unaccounted expenses or if your employment changes.
- Assess your total net worth regularly.
- This will help you assess what you owe and have to feel more in control of your finances.
- Maintain a budget for these uncertain times
- This will help you see a clearer picture of what is needed and allotted for the short term (recommended 3-6month monthly budgets).
- Enroll in Cash Back and rewards apps to help you earn extra money
- This will help you earn extra money on your current purchases and lower the cost to shop.
- Use your time to find ways to make some excess income on the side
- This will help increase your income in order to save for the future.
- Automate your savings/investments
- This will help you save without thinking about it regularly.
- Invest after you have assessed financial fundamentals of your investment
- This will help you invest in sound investments for the future and not invest in risky investments.
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