ARTICLE by Thomas J Law
These are challenging times.
The coronavirus, COVID-19, has quickly traveled around the world. Countries have closed their borders, healthcare services are stretched past their limits, large regions are quarantined, and millions of people are self-isolating at home.
Still, another challenge seems to be on its way: a global economic recession.
The catastrophic effect of the coronavirus is rippling its way through economies, devastating businesses and crippling economic growth.
Simply put, things don’t look good.
But what exactly is a global recession? Will it happen? And if so, what can you do about it to stay safe?
Let’s find out.
What is an Economic Recession?
Here’s the most accepted definition of an economic recession:
A period in which the gross domestic product (GDP) – the amount a country produces and sells – declines for two or more consecutive financial quarters.
In other words, a country’s finances aren’t growing, they’re shrinking.
In the U.S., recessions are measured and confirmed by The National Bureau of Economic Research (NBER). This group of economists has a more detailed definition of an economic recession:
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough.”
But what does this mean exactly?
First, let’s take a look at how economies work when they’re healthy and growing.