In just a few short months, the corona plague has wiped out the U.S. economy, an unexpected crisis that will affect the economy for years to come.
There are 5 more trends that will continue to affect the US.
Understanding these trends can help you protect your financial future!
US recovery from the epidemic
In the first quarter of 2020, growth was down 5%. It marked the beginning of the 2020 recession. It also ended 128 months of the longest quarter in U.S. history.
In the second quarter, the economy contracted at a peak of 31.4%. Quarterly GDP has never experienced a decline of more than 10% since record keeping began in 1947.
The economy recovered in the third quarter, expanding by 33.1%. Despite the record, it was not enough to offset previous losses.
In December 2020, US GDP was expected to shrink by 2.4% but rose by 4.2% in 2021. In the first quarter of 2021 it grew by 6.4%.
At the start of the epidemic, the unemployment rate jumped to 14.7% in April, when companies laid off workers. The unemployment rate remains double-digit until July.
By the beginning of 2021, the unemployment rate had dropped to about 6%, where it remained in June 2021.
Interest rates will remain low until 2023
In March 2020, the Federal Open Market Commission held an emergency meeting to address the economic impact of the corona plague. It has lowered the federal interest rate to its current target range of between 0% and 0.25%. The Federal Fund interest rate is the reference rate for adjustable rate loans and short-term loans. This is much lower than the federal target range of 1.5 to 2%.
It also means that inflation is below the federal target of 2%. On September 16, 2020, they announced that they would keep the index rate at the current level until inflation reaches 2.0% over a long period. The federal forecast for December 16 that this will not happen until at least 2023
The federal government is also taking steps to keep interest rates low on fixed and long-term loans. They restarted the quantitative easing program.
In March 2020, the Federal Reserve announced it would purchase $ 500 billion in U.S. Treasury and $ 200 billion in mortgage-backed securities. It soon expanded its purchases to an unlimited quantity.
As a result, lending costs plummeted, and mortgages dropped to record levels. It also means that savers earn less on their deposits than they earned during the recession.
Climate change is causing more natural disasters
The climate in the US is changing as a result of global warming caused by increasing greenhouse gases. As the country experiences more hot days, food prices rise. Corn and soybean yields in the United States are plummeting as temperatures rise above 84 degrees Fahrenheit.
Climate change is creating storms, droughts and unexpected and violent floods.
Sea level rise Exacerbates flooding in low-lying towns, threatening nearly 40 percent of Americans living in coastal counties and eight of the world's 10 largest cities. Floods hit U.S. coastal towns three to nine times more often than 50 years ago.
From 2005 to 2017, sea level rise in hotspots in Florida, Virginia and South Carolina more than $ 2 billion.
The drought In California from 2014 to 2016, the state cost about $ 3.8 billion. Nearly three-quarters of the casualties were in the southern central valley. Studies have predicted that by 2050, Southwest America will experience a mega-drought. It will last more than 35 years, according to scientists at Cornell University.
frequency Fires The forest in the western United States has risen by almost 400% since 1970. Harmful fires have occurred in recent years in places like California, Colorado and Oregon.
The financial markets control the prices of oil, gas and food
Supply and demand have become less important in price control. Instead, commodity traders set prices for oil, gas and food, and forex traders set the value of the dollar. The speed of transactions also increased economic volatility. Gas and oil prices rise and fall, depending on the moods of investors. This translates into higher food costs or a drop in commodity prices.
Gold prices peaked in 2011; However, it rose in August 2020 with a new record. In 2012, interest rates reached a new low. Again, 2020 interest rates have fallen lower than the previous high.
The dollar rose 11.8% between December 2014 and December 2015. At the same time, oil prices fell to an 11-year low.
The US is declining in global economic power
Before the Great Recession, the United States was the only superpower in the world. In 2009, the G-20 took center stage in the global economy and gave more power to Brazil, Russia, India and China.
These emerging market countries initially survived the recession better than Europe or the United States. Their strong economies have given them the leverage to demand more global economic power. Although they have since created new economic problems for themselves, they have retained much of their power.
The emergence of other world economic powers has contributed to American unrest.
The perceived loss of American power status is behind the attacks on free trade, outsourcing and currency manipulation. But even if the US pursues a protectionist policy, these emerging market countries will continue to grow by force.
Older generations do not retire
A survey by the research center showed that 35% of adults aged 62 and over who are still working postponed retirement because of the Great Recession. Even someone who can afford to retire will probably continue to work in some position. The recession left emotional scars. This has created a new willingness among many baby boomers to keep costs low and high incomes. This means that the old notion of playing golf and retiring really gives way to many forms of semi-retirement.
This retirement crisis means that as the older generations continue in their roles, there is not so much room for the younger generation.
This caused the millennial generation to adapt by giving up the “career path”. They want to make a living in a significant field for them. Some use technological innovation to create new jobs that did not exist. Many receive high-level degrees. Others use temporary jobs to fund a rewarding lifestyle, a trend that is consistent with companies that want to keep a low ceiling, avoid health expenses and continue to hire and fire employees.
To thrive, workers must generate multiple revenue streams and remain flexible.
The best ways to thrive?
Be independent. Try to find a way to make money from a hobby. Be realistic about your attractiveness in the job market, whether because of your age or because of your work history. Get new part-time skills that can become a full-time job. Be open about what you can do to make more money. Stay focused on turning your skills, assets and time into more cash. Be aware of economic trends, and take advantage of them.