Since I’ve started working for Bourke Accounting, I’ve learned new things; I’m not ready to complete your corporate tax return, but I’ve absorbed some information. Because of this, I was embarrassed that I couldn’t definitively list the fundamental differences between a recession and a depression. I knew that both recessions and depressions meant less money for everyone. I knew that, in 2008, the recession made finding a job nightmarish. And I also knew that The Great Depression was one sincerely dark period for America that I read about in History class.
My skimpy comprehension laid bare above is none too impressive. What is even less impressive than that is the fact that, although economists might be able to provide an intelligent definition, they’re almost as ignorant as I am regarding how to combat either.
Cashay.com defines a recession as a “period when the gross domestic product…falls for two consecutive quarters.” At this point, it should come as no surprise that The National Bureau of Economic Research has just reported that the “COVID-19 crisis has officially launched the US economy into a recession” (Finance.Yahoo.com). Cashay.com then backs up the NBER data by reminding us that all of the omens for a good old recession are in the air: unemployment, real estate slumps, lack of consumer spending and drops in business activity. Yeah, a recession warning seems legit.
According to Cashay.com, a depression is “considered a more severe and extended recession.” Basically, a depression is just your average recession on crack. What makes our current situation a lot scarier is that, besides failing businesses and bankrupted individuals, we’re also forced to contend with a disease. If, after states fully reopen, there’s an increase in corona infection, people will be reluctant to “resume shopping, eating out and engaging in other consumer activities” (NBCNews.com). Obviously, it will be hard to restart the economy if no one is out there spending.
So now that we’re dipping our toes in the recession pool, we find that the water is cold. Some articles attempt to offer guidance on how best to struggle through these times. The most common tip is to save money; Sea.Mashable.com suggests saving “3 to 6 months’ worth of monthly expenses.” I’m not sure how to tell Sea.Mashable that unemployed people, some of whom still haven’t received benefits, have nothing to save. Another great piece of advice is to use your emergency fund. Great idea, but “just 40% of Americans could pay an unexpected $1,000 expense” (CNBC.com), so what emergency fund, guys?
The final word? Take whatever help the government is offering. Literally, that’s the last bullet point in about 10 articles I’ve read. There is no encouragement given after that suggestion, either. No “don’t worry, it’ll be ok,” – nope, it’s just “hold out your hand and hope the government has something left for you.” Dare I wonder if America’s financial journalists are depressed?
I don’t believe that there will be a depression and I think that our recession will be short-lived. Trust the person who couldn’t define the words when she tells you not to worry about either. Maybe I’ve watched too many 1980s romance movies, but after everything we’ve been through, I think the underdog is going to score the winning goal and get to kiss the popular love interest at the end. Oh, and don’t worry, it’ll be ok.
At Bourke Accounting, the advice is much better than the kind given by sad writers. While our Bourke Accounting pros won’t sugarcoat your situation, they will explore every avenue to help you. Our Bourke Accounting experts won’t suggest the impossible and they sure as anything won’t tell you to hold out your hand and hope for the best. At Bourke Accounting, you will receive real assistance to battle any recession.
Written by Sue H.