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Recovery on what basis? People will be declaring bankruptcy by early next year. Q4 shopping will undoubtedly NOT occur and be a non event. Hospitality/Travel/Tourism/Retail/Restaurants/Real Estate/Oil & Gas all are getting WRECKED .... The knock on effects to everyone else is catastrophic...
We can't recover in Q3 let alone by Q3 of NEXT YEAR... There is no rewind button... We can't undo this. This isn't Microsoft Paint 98' we are FUBAR...
The restaurants that closed , many won't be able to open again. The banks won't have enough money to lend to everyone that just got wrecked for 3 months of zero income. Many businesses will get the short end and told to file Chapter 7.
This is a good point. Im in a related industry though and still go out without spending that much. Point I was trying to make is that people spend way too much too regularly to keep up appearances. Good times can be had for less, or an occasional splurge instead of weekly for example.
Unfortunately the American economy in 2019 and the stock values that accompanied it were not predicated on "the occasional splurge"
The American economy post-recession was fueled by credit card debt, temporary wage increases to the bottom 20% of workers and easy credit to Corps which allowed corps to hire and expand.
The average American has $5k in CC debt which is below the pre-recession level but what isn't being discussed is wages of the MIDDLE CLASS ($75k-$250k, depending on the region) has remained mostly stagnant due to most new post-08 jobs being LOW PAID....Which means that $5k in debt factoring in inflation to rent (due to the real estate bubble AGAIN.... this time in a different form) is actually $10k in debt...
Now CC debt alone is not the problem...The problem is PAYROLL taxes are DOWN even prior to the tax cuts, which means government income is LOWER, govt debt naturally is going to TRIPLE and the average American small business is SO FRAGILE that they can't even cover 3 months of unexpected expenses ONCE EVERY 10 YEARS...The government already being heavily indebted cannot bail out mainstream America.
The big banks pass the stress test but America's small businesses which create the majority of moderate paying jobs ($35k-$75k) FAIL WITH FLYING COLORS....
Meaning that Brunch place WILL go under because it was not profitable on customers like you who only splurge once in a while.... I'm pretty sure the favorite restaurant my Wife and I go to ONCE A MONTH is not surviving off of people like us. They are surviving off of multiple people who eat there ONCE A WEEK. And they are expensive, so guess what that means....Onto the Capital One CC it goes....where even the 720 FICOers will be paying a healthy 17% APR on average....
Totally agree. This will be closer to a Great Depression than it will to, say, the '08 housing crisis/recession. I don't see these bailouts as doing much of anything other than postponing the inevitable, which is massive layoffs and more bankruptcies than this country can handle. The only glimmer of hope is a fast-tracked virus vaccine, but even fast-tracked it will still take a year or more to be rolled out to the public on a massive scale.
Your best bet now is to cut back on all unnecessary expenses and save as much as you can while you still have a job. If you do lose your job, the government will provide you UE benefits and they'll likely extend them for those in need but now is the time to act, not a month from now.
Bingo, and this is going to be the hardest on the current generation who think nothing of spending everything they earn. Starbucks closed all their stores, but still has drive up and people are getting coffee there.
I considered Starbucks a once in awhile treat, not 5 days a week. So that would be $100 a month for a latte.
That's my car insurance for the year.
As you said cut back right now on unnecessary expenses.
Bingo, and this is going to be the hardest on the current generation who think nothing of spending everything they earn. Starbucks closed all their stores, but still has drive up and people are getting coffee there.
I considered Starbucks a once in awhile treat, not 5 days a week. So that would be $100 a month for a latte.
That's my car insurance for the year.
As you said cut back right now on unnecessary expenses.
The problem is even if Millennials saved every dime they earned it would still not be enough.
Millennial wages are on par with Gen X. There has been virtually no wage inflation except in certain sectors...So the millennial office worker in 2020 is making damn near what an officer worker made in 1986 adjusted for inflation. Yet rents, higher education have risen. They could have saved every dime and still not have enough for a little more than 3 months cushion room. This thing will last at least 18-24 months. Most Boomers are still tapped out from the 08 recession and now people are going to be living under a bridge unless drastic action is taken.
Hell in San Francisco there's ALREADY homeless camps....This is what many folks here do not GET....We were already on shaky ground, the Fed L-I-E-D and the fundamentals of our economy WERE NOT and ARE NOT strong AT ALL.....
You can't save money working for McDonald's for 10 years even in Ohio but you sure had a better chance trying to do that in 1986 than you do now.
I'm gluten-free and by default, that's expensive. I have celiac and the testing to get that all done was expensive. I was having liver issues, which they thought was autoimmune, but thank goodness it wasn't. I'm still paying off debt for that. I work a crummy job with high deductible insurance. It's also very low pay, we're not getting a 10 cents raise this year either. I was hoping to get a new job.
I was 19 and in college in 2008. I'm working now, working two jobs, and still live at home. Dad is retiring this year and now I'm getting nervous. I'm paying off all the debt I have while I have a job. I appeal insurance companies on behalf of ER doctors. As much of a crummy job it is, I think I might have it for a bit. I work PT in a library. I think I'll look into freelance writing and photography as well. My degree is in English.
The stock market is in free fall because we're in recession right now. The majority of the economy is in the process of deleveraging all at once.....this is going to be ugly and chaotic for awhile. Many businesses will go under.
However I think between the Fed and the treasury the liquidity and helicopter money they provide should stabilize the markets enough so that we can limp along while working through this. The economy for the rest of this year is basically off the table as far as recovery. Maybe by 2Q of next year things can start slowly coming around, but the psychological shock of what's happening is going to make recovery slow.
In the meantime there's still going to be demand, but it will shift from consumer discretionary to consumer staples, which is why Amazon is trying to hire 100,000 more people right now. Some businesses will find opportunity in all of this chaos and will do very well, so it won't be doom and gloom for everyone.
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What is considered a nonessential business
