Signs We May Be Heading into a Depression
The first indication that this pandemic will be more difficult to weather than it may have first appeared is the unemployment report for March. In the last two weeks of the month alone, close to 10 million US residents filed for unemployment.
And this is just the beginning. Many people are still at risk of losing their jobs, whereas others have already lost their jobs and haven’t yet applied for unemployment benefits. After all, it’s a complex process. By the middle of the year, we could see an unemployment rate as high as 15 percent — which is more than at the height of the 2008 Great Recession.
Another sign is predictions for GDP growth. Experts expect huge drops during both the first and second quarter of 2020. Janet Yellen, former Chair of the Federal Reserve, says that year-on-year growth in the second quarter is likely to fall by 30 percent.
The third sign of an impending depression is activity in the services sector. Restaurants, bars, hotels, and other service-industry businesses saw the steepest drop in economic activity ever recorded in March, at least according to one survey.
Even if these businesses are able to open again in the coming months, social distancing will mean that patrons need to keep 6 feet from each other. For many bars and restaurants, it’s not feasible to be open to so few customers at a time. Plus, this assumes that people will feel that they can afford to go out again.
