Coronavirus’s effects on the economy have been profound. As world markets have been pushed into recession, experts are wondering whether economies can be rebuilt or if something worse is still to come. While our Amarillo credit union can get you the best loan rates, here are some things experts are realizing:
- Businesses are Unprepared to Respond to COVID-19
In recent months, we’ve realized many jobs are not essential, yet they exist for people to have an income (however, reopening has led to a resurgence of COVID-19). Jobs in critical services are less valued. For example, productivity growth (doing more with fewer people) is lower in healthcare, making associated costs go up.
- Fastest, Steepest Decline Since 1990
Most countries are facing recessions and, with the current one, economists have released the steepest downgrade in consensus growth projections since 1990. The global recession is impacting sectors that account for one-third of the gross domestic product (GDP) and 70% of employment in emerging markets/developing countries.1
- Damage to Productivity Abroad
Growth was slowing in developing economies before the COVID-19 crisis. Economists are looking at setbacks to potential output, especially in low-income economies and where healthcare capacity is limited. In these countries, recessions may be deeper and longer.
- Increased Saving
A generation that is learning the world is more fragile than they realized may prioritize saving cash more than ever, which may limit GDP growth. A recent Bankrate study found 52% of Americans have cut back on spending during the pandemic.2 It’s likely many are looking for a safe credit union that offers low-interest rates.
- World Trade Is Slowing
Hyper-globalization, in which production was relocated to low-wage countries, began in the early 1990s and ended with the previous crisis. According to VoxEU.org, the World Uncertainty Index (WUI) may increase by 300% (compared to 200% between 2008 and 2012) and global value chain (GVC) activity could be reduced by 35.4%.3
- Robots Are Becoming More Economical
Another impact of coronavirus on the economy is the sharp decline in interest rates, which is making robots less costly than wages. When machines replace workers, countries can move production back to their home soil.
- Disproportionate Impact Among Older Americans
Many older Americans were forced to return to work after the Great Recession eroded their savings. It took workers age 65 and older longer to find new jobs than those ages 35 to 44. The pandemic crisis could have a disproportionate impact on low-income older adults who don’t own their homes, have no health insurance, and are small business owners.
- Greater Strain on Microbusinesses
Economists predict an even more disproportionate number of job losses for small businesses than in the past—even more so than during the Great Recession. The Brookings Institution estimated that about 2.9 million microbusinesses were at an immediate or near-term risk.4
- Future Urban Renewal Depends on Generation Z
Younger Americans, born after 1996, may be drawn to leaving urban areas for social distancing reasons. However, based on trends in population gains following the Great Recession, the educated and racially diverse Gen Z may later return and contribute to future city growth.
- Food Retail Will Continue to Grow
While large retailers have integrated restaurants, and restaurants have turned into food trucks on the streets, many are continuing to adapt despite virus fears and shutdowns. Pickup and delivery services are prospering now. The success of food retail will continue to be intertwined with home sales and office and residential rental demand beyond COVID-19.
Manage Your Personal Financial Well-Being
Only good money management will help you weather the COVID-19 crisis financially. We’re the best online credit union serving Amarillo, Canyon, and Childress, TX to find low-interest rate loans and credit cards. Our products and services are designed to help you focus on your financial wellness. To learn more, continue browsing or call 806-359-8571.