Headlines about a looming recession have been hanging around for a little while now, but after stock markets took a massive dive in response to coronavirus lockdowns, there’s a good chance that we’re starting a recession right in the face. So what the hell is going on?
What Is A Recession?
In economics, you want people to be buying things. If people are making things and others are buying them, the country is making money, and that’s great. If people aren’t buying things – for example because they’ve hoarded all the toilet paper they’ll ever need, or because their country has been put in lockdown, or because they’re too scared to go out to the shops – then the country faces an economic decline.
If you have two consecutive quarters where the country’s Gross Domestic Product (GDP) doesn’t go up, you’re officially in a recession. Seeing as Wall Street has seen its worst day in a decade this morning, it’s not looking great for the global economy.
So What Happens To Me?
A few things come along with a recession outside of stock market dives, and probably the biggest thing is a rise in unemployment. Jobs start to disappear, and sadly casual workers are generally the first to be laid off.
One area that we really don’t know a lot about yet is how the gig economy will fare in a recession. On the one hand, if people are losing their jobs then there will probably be a massive rise in people doing jobs like driving for Uber. On the other hand, if people are losing their jobs, they aren’t going to be ordering Uber Eats every Friday.
Even if you do have a stable job, you might have your hours cut, and it’ll be way harder to get a pay rise.
If you’ve just graduated uni, it’ll likely be a lot harder to land a job after school. Again, if jobs are disappearing, there aren’t going to be many going around for graduates.
Are We All Going To Be Living In The Great Depression 2.0?
Thankfully no. A Depression is a severe, extended recession that lasts for a few years. We aren’t heading towards one of those, more likely a “short, sharp” global recession. The recession in 2008 lasted for 18 months and was considered a “once in a 50 or 100 year event” so it probably won’t be as bad as that.
It might really suck while it happens, but thankfully it won’t last forever.
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