The pandemic has caused the world to enter into a state of extreme chaos. Every country is trying its best to curb the spread of the virus and to somehow control its economy. With the unemployment rate on the rise and the US stock market undergoing many losses, the future of the economy in 2021 doesn’t look bright as yet.
What is expected of the US Economy in near Future? Is the US economy going to crash?
Is the US economy about to collapse? No doubt that the global economy is facing a downfall that only a few economies had experienced before. Experts say that the US economy might even face depression in the near future, which is worse than a recession. To help you understand, economic depression is when the effect of the downfall lasts on the economy for a couple of years, while a recession is a decline in the economic life of a country that doesn’t last long, probably just a few months.
Current & Post-Pandemic Prospects of the US Economy
The post-pandemic situation in the USA is quite uncertain. People’s lifestyles, jobs, celebrations, and interactions everything will face drastic changes. There are chances that America’s economy might become less competitive than other mighty economies of the world like China, Japan, Germany, etc., and may even affect its associations with other countries.
Many countries, especially the middle and low-income nations are facing problems regarding efficient healthcare provider that has led to the demise of a large chunk of their population. To cater and recover these extra costs, the governments have to rely on debts, but inevitably the effect of these expenditures and loans will burden the global financial system, causing a proportional yet significant impact on the US economy.
The Political Unrest is Shaking it too
The Black Lives Matter movement and the political unrest in the USA during 2020, has worsened the economic situation of the country. With the financial crisis at hand, Republicans and Democrats were not aware whether the citation is alarming or not. Hence, no such plans or approaches were discussed to deal with these problems.
Unemployment Rates like Never Before
The unemployment rate in the US at the start of the pandemic was around 14.7 %, and the second and third wave of covid-19 is all set to amplify it with more people being unemployed. The rate may not decrease anywhere in the near future as many businesses are forced to shut down due to immense losses. The government can also not afford to offer financial support for every company undergoing a loss during the pandemic. This will leave many workers and corporate employees in a rut.
The unemployment rate may remain exceedingly high for the next decade, as cautioned by the Congressional Budget Office and the economic output may decrease manifolds in the next few years, except if the government changes the way it spends on taxes and other expenditures.
The Group of Seven governments went out of their way to provide financial support to employees and businesses in the early stage of the pandemic, assuming that by the time the pandemic would be over, they would be supported sufficiently. This support has improved financial markets but does not confirm this trend in subsequent time because the coronavirus has had a negative and lasting impact on the economy.
Hence, looking at the economic growth pace, a spiked line can be spotted, called a ‘jagged swoosh’ will be formed, showing the slow and uneven global economic recovery after the pandemic.
How to Speed Up Recovery and Deal with the Crisis?
In order to avoid the economy to crash, which seems coming, the US government should be prepared to make important and sturdy decisions. The government will have to financially support the businesses and individuals to back on their feet. It is certainly a high-time for the US government to make plans and budgets according to the prevailing condition in the world. No decision should be taken without taking the pandemic into account.
Can the Economy Collapse?
In short, yes the US. the economy may collapse fast, and besides the uncertainty of the pandemic and its aftermath, the situation is indeed inevitable. Not just for the USA, but globally, almost every country is faced with an economic crisis, no matter if they managed to contain the virus at some point or not. And with the rate of transmission around the world, we can expect a greater level of destruction and extensive economic costs.
The conference on Trade and Development by the United Nations concluded that global growth rates could fall by 0.5% and could cost the global economy around $2 trillion just for the year 2020.