I will be the first to tell you that the pandemic affected my finances directly. Within the first three weeks of the pandemic, I lost 90% of my pre-pandemic clients and none of them have returned. I got email after email of clients closing their doors and went through months of wondering if my business would be next. To keep my business afloat, I took on a lot of lower-paying work and promised myself I would exhaust every option possible before looking for a regular job or accepting an unemployment check.
Thankfully, hard work and good business relationships paid off. Now, my clients are begging contractors to pick up more work and contractors seem less willing to do any. Everywhere I look, I see cars with brand-new tags, loaded U-Haul trucks with happy drivers, and RVs cruising down the highway. Americans are spending a lot of money on non-essential items, so is there really a recession?
A Conversation Between Business Owners
Today, I had some on-site work to do and struck up a conversation with the property owner, who also happens to own a restaurant. I asked him how his business was doing and he laughed. “You know,” he said, “I know a lot of people have lost their jobs and I’ve seen a lot of restaurants close down and I have no idea why. My business is BOOMING. We’re making more now than we did, pre-pandemic.”
He added, “It’s not just me, either. A friend of mine owns a motorcycle dealership and there are usually hundreds of bikes on his lot. I dropped by this week and there were about 20. As soon as he gets them in, people ride them right off the lot.”
What the Economists Have To Say
Regardless of what our observations have been, economists reported that the American economy officially entered a recession, in June. In fact, the original announcement came from the National Bureau of Economic Research. The prior month, the unemployment rate was a whopping 13%. Economists have not seen these unemployment levels since the Great Depression and wonder if this will turn into an economic depression.
Layman people often use the term “recession” loosely. However, economists have a specific test an economy must meet to get slapped with the dreaded R-word. CNBC explains that “recession” describes an instance of at least two consecutive quarters where an economy churns out a negative gross domestic product. “Depression” has a looser definition and simply refers to a prolonged period of economic decline. The only American depression to take place during industrial times lasted for a decade.
You can’t argue with numbers — at least, I sure won’t make a habit of doing so. Even so, one has to ask how it’s possible that during a recession, Americans have the resources to spend more money than usual on luxury items. Even I am guilty of this, having traded in my budget car for my dream SUV, in July.
A Comparison Between American and Jamaican Recessions
It’s perfectly possible that maybe I’m just not used to First World recessions. I experienced my first recession while living in Jamaica. Like many millennials, it hit while I was in college. In fact, 2008 was the first year of my bachelor’s degree. I had already been living on my own since 2006 and could see a clear difference between how much food cost and how much I spent on utilities. My monthly budget was around $450. Budgeting was no walk in the park.
America certainly had its own problems during that time. However, there seem to be differences in how its economy responds to a recession versus Jamaica and many other developing nations. To illustrate this, I’ll use inflation. This is another word we often use loosely, but in economic terms, it refers to higher prices for goods and services corresponding with the declining value of money. Some inflation is healthy for an economy, but too much can price even basic goods and services outside the reach of everyday customers.
America’s average annual inflation rate is around 3.84%. It had the following inflation rates from 2007 to 2011.
- 2007: 2.8%
- 2008: 3.8%
- 2009: -0.4%
- 2010: 1.6%
- 2011: 3.2%
Sadly, Jamaica has a long history of an unstable economy. You see this most clearly when you consider that in the past 25 years, we have seen inflation rates as low as 2.35% and as high as 77.3%. Jamaica experienced the following inflation rates from 2007 to 2011:
- 2007: 9.15%
- 2008: 22.03%
- 2009: 9.57%
- 2010: 12.61%
- 2011: 7.53%
Put simply, no matter how hard Americans had it at the time, Jamaicans were in much deeper water. Thankfully, the economy has mostly recovered and economists project an ongoing inflation rate of 5% for the next few years. Time will tell if the pandemic sets us back again.
My Final Verdict
I recently reached out to one of my friends to ask if his business was in recovery now that people are feeling more comfortable flying again. He’s an engineer that runs a business in the aerospace industry and he took a serious financial hit when the pandemic started. He said business has not picked up again and that he plans to retrain for another profession altogether as a Plan B while he waits. He is one of many business owners still struggling to recover from the curve ball the pandemic threw them.
So, is there really a recession in America? There most certainly is. However, the coronavirus has been very selective about who it takes as financial victims. I also think many people have selected themselves. I know of too many businesses desperately trying to get workers to pick up shifts and contract assignments to believe the high unemployment rate doesn’t stem, in part, from some people looking to profit from free unemployment checks. It certainly isn’t the majority, but I’ve seen it taking place with my clients. (Where did all the other contractors go?)
Finally, there is the fact that I spent my first recession in a developing country and will now spend this one in a developed country. Maybe what looks like suffering to First Worlders will always look like thriving to me.
Have you spent both of the most recent recessions on American soil? Does this recession bear a striking resemblance to the former, in your opinion? Or, do you also see differences? Also, how has the recession personally affected you, so far? Share your experiences in the comments below!
PS:- Please excuse my tardiness with posting over the past few weeks. I’m working on a few side projects on my days off and can’t wait to share them with you. Unfortunately, it will be December before I can share full details. I will say, however, that one includes my recently finished vampire novel! After doing my pre-beta read, I’ll be looking for beta readers, so let me know if you’re interested!
This was an interesting contrast…One I’ve never given thought to! 🤔 Considering that I was in primary school when the first recession happened, I don’t have much of a say on this! However, from what I see online, and have heard about the recessions, I think your analysis is right. The virus has been very selective on who it attacks. Funny enough, while motor vehicle sales are booming there, there are declining here! Dealerships have to be giving CRAZY sales every month! Hell, Suzuki had a sale for a month and struggled to sell everything. Now, they have another one for their ’20/’21 models and its….yeah.
I think Jamaicans could survive the US’ recession with ease. Less is more for us, more is less for them.
YES YES YES. I would love to be a beta-reader for your new book!!!!
Being retired, I thankfully haven’t been affected personally, but know many small businesses that are struggling in our area. What bothers me is that large corporations are the ones getting the most government help and not the smaller businesses as originally promised.
It really infuriated me as well to hear how much money corporations got of resources set aside for small business owners. It was all a big scam.
I’m glad you’re still not personally affected though!
Here in New Zealand, we have done well from a health perspective, but the economic toll from our lockdowns hasn’t been good. Fortunately the government has supported many businesses with wage subsidies, although I don’t know how long that will last. I know a few people here who have lost their jobs. You are right about these things being selective though; as I work for an essential business it hasn’t affected me much. Things here probably still seem good compared to Jamaica though.
Being retired, so far this recession has not affected us. The last recession didn’t really either (both of us were working). I think it is the poor people. (Front line) that suffer the most. They lose their jobs and lose health care. More are dying. So many in Texas haven’t even been able to get unemployment checks yet. Some people may have savings and unemployment makes up the difference. Others have zero savings. The fear of getting the virus is keeping some from working if they have to leave their homes. A lot of people do not have your smarts and drive to be able to know how to get work. We feel very fortunate. We used the government checks to donate to food banks and other organizations. So no, we have not been poorly affected financially.
Hi Ruth! I’m so happy to hear you haven’t been affected. As I said to another commenter, I’m happy to see the middle class still thriving because the trickling down will primarily come from us, not the rich. Without the middle class, America has a much wider gap to fill with no stepping stones.
I’m glad to hear you donated your checks, as well! I needed mine when I got it, so I kept it. I think my business finally recovered about a month or two after. However, it’s not the same business as before. I went from writing a lot of fun articles to primarily writing law. It gets monotonous very quickly, but I’m grateful to still have a business and a steady income.
Here’s to hoping we continue to hang in there financially and health wise!
Yes!! Let’s hang together!!
I have a lot of friends who work in live theatre and they have lost their jobs. The theatres are not set to open until next year if at all. This includes concerts, music festivals, dance, Opera, etc. There are so many people employed by these venues – production, box office, audience services, transportation, parking attendants, ushers, set designers, gaffers, costume, educational services, minority productions, etc. The employees are very concerned with their living situation and some are lined up for food distribution. All of the live theatre and Opera houses are closed and the employees are on furlough or laid off. Yes, you are right! The virus “has been very selective about who it takes as financial victims”. – Neek
All my clients in entertainment were the first to go! I really feel for that industry. Some of them have found creative ways to keep serving the population. Even in Jamaica, movie theaters are reopening drive-in movies and I’m so excited for that. There’s one a few miles from my house, here in Atlanta, as well.
When it comes to live performances like that, though….that’s tough. I’ve seen some drive in concerts across Europe, but not drive in theatre. I mean …you have to SEE the stage, not just hear it….and I think, therein lies the dillemma. Usually you stack seats going upward so everyone can see, but how does one safely stack cars?? I hope they find a way to pivot soon.
All the best to your friends and you!
Thanks Alexis! Hopefully next year they will open safely.
I hope so too! Fingers crossed for us all! I miss my entertainment clients. 😭
Our business is booming and I wish it would stop. I’m exhausted. We’ve had record months since the pandemic and all wood is at a premium price. Weird. Nesting instinct for something on the horizon? I dunno.
That’s amazing! I’m happy to hear that it’s not just big corporations suddenly booming. I’m so glad to see people like us doing well at such a difficult time, because the so called trickle-down effect really only takes place between middle and lower classes. Upper class only trickles when they spring an accident leak!
I’ve also been exhausted by all the extra work my clients are begging me to take on. But I also need to get the pre-beta reading done for my novel. I’m taking 10 days off, starting tomorrow. I plan to get it all done during that time. Wish me luck!
Thank you for a very interesting, and in my opinion for people with the same situation very helpful posting. I am sure we will overcome these pandemic, and the recession, at least for all the bigger nations. But i am also sure the USA will make better results, as there is more difference in the businesses itself. Here in Germany, and at least in most other European countries are too much employed as production workers, in the automotive industries. This branch lost the line of modernisation. Selfemployment at first looking not to be the best for the business owner itself, but for a state its immanent to maintain social stability. Now i am ending waffeling. 😉 Be well, stay save, but dont forget to live. Michael
Thanks for the German input, Michael. It actually didn’t occur to me that Germany didn’t have a very diversified economy, but that does make sense.
Jamaica has a similar problem. We focus primarily on tourism. It accounts for 80% of the economy. So, when other people can’t afford to travel, we suffer terribly. As we say on the island, when America sneezes….we catch the cold. Quite the saying in a pandemic like this, too!
Here’s to hoping all our countries not only recover but better safeguard our economies against future attacks.
Thanks again!
Gosh, i forgot. Yes, tourism is another branch hurt very hard these days. You are so right. Be well and stay save, you are tough enough. Michael
Always with a great pleasure, Alexis! Thank you for the very interesting information. I really had it not on the map, tourism could be so important. Sounds horrible, because Jamaica is a wonderful place, like paradise. Best wishes, Michael
The United States has an unfair advantage over almost all countries. She dose not have to balance her books. As long as the dollar is the world standard she can just print more money.
The Federal Reserve is currently doing that and infusing banks with zero interest loans to prop up the economy creating a bubble. It protects a segment of the population and gives them time to prepare if the bubble burst.
Just imagine what you could do with an unlimited amount of zero interest money?
There is ALWAYS a economic depression after every Republican administration as they find ways to steal and redirect money away from the average American. There was one after Bush and Clinton cleaned it up. There was another one after Bush Jr and Obama cleaned it up. Now we are here under Trump. Congress is bailing out certain industries and the feds are pumping interest free money into the economy, hopefully the bubble will not burst ;-(.
https://www.google.com/amp/s/www.washingtonpost.com/business/2020/03/25/still-too-big-fail-us-is-primed-bail-out-corporations-again/%3foutputType=amp
I didn’t realise we always had a recession after a Republican president, but the evidence you presented is sound. Funny enough, they cause the recession and then blame the Democrats for it while we’re trying to clean it up. I suppose the good news is that Democrats usually get elected once the recession hits. Let’s hope that plays out this year. I’ll check out that link ASAP. Thank you!
Read the article! I found this part most surprising of all:
“I don’t want to give a bailout to a company and then have somebody go out and use that money to buy back stock in the company and raise the price and then get a bonus,” Trump said. “So I may be Republican, but I don’t like that. I want them to use the money for the workers.”
I was aware of the corporate bailouts, but this filled in the technicalities behind them. Personally, I think taxpayers should get to vote on who we bail out, why and under what conditions.
Don’t listen to what politicians say, look at what they do. Trump bailed out corporations (many were not American companies) with tax payer dollars. We don’t know exactly how many or how much because the Bill give permission to hide those details.
This is nothing new. That is why I used the word steal. Republicans believe in “Trickle Down Economics”. Give to the rich and corporations and hopefully it Trickles down to the masses but it never does.
Unfortunately tax payers vote in representatives (535 members in Congress) but never pay attention to what they do. Many just care if they have an R or D before their names.
There are close to 600 bills and legislation, many that will help workers and average people being blocked and ignored in the Senate. Ironically they spring to life to confirm a Supreme Court Justice in record time ;-(
https://www.google.com/amp/s/www.vox.com/platform/amp/2019/11/29/20977735/how-many-bills-passed-house-democrats-trump
I haven’t looked into this beyond that article and others on how they scammed us out of the money set aside for small business owners, so I’ll have to take your word for now. Thanks for sharing! Hopefully things change for the better.