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The Coronavirus Recession - Coggle Diagram
The Coronavirus Recession
Historical Difference
The main reason this economic downturn is different from others in history is that it’s not the result of instability in the financial system, Instead, the coronavirus economic shock is the result of measures necessary to contain a health crisis, like social distancing and isolation.
Effects of it being a medical issue...
Safety Hazard
Because the recession is due to a medical issue instead of a financial one there isn't much companies and firms can do about it, which means they have no idea how long it may last. In addition, they can't have people working to produce goods as it could cause them to become ill.
2008
It’s less similar to the recession in 2008 because that actually started with a dramatic loss in wealth. Our current crisis is due to a forced reduction in consumer demand
that’s why early on people were very optimistic about saying, "People aren’t shopping, but once people go shopping everything will go back to normal." That would have worked if it would have been a very short-run crisis yet because it is a medical issue it keeps being prolonged.
Unemployment
If they can't have any people working no goods are produced and if no goods are produced there is no income. As there is a decrease in the amount of money a business is making, in order to avoid bankruptcy they must consider salary cuts and or making various position either redundant or put on hold.
This has resulted in more people loosing jobs per day, which has effected insurance companies as they’ve never had this level of people claiming unemployment insurance.
Government Intervention
Because the crisis doesn't seem to be coming to an end/it keeps getting prolonged the uncertainty of it's time frame means people will continue to loose jobs, companies will shut down and the amount of government intervention is likely to increase a lot.
Not only has the coronavirus impacted businesses and citizens it has resulted in companies encouraging government intervention. This could be perceived as a positive outcome of the crisis as more government intervention could reduce the amount of corruption and increase the quality of goods being produced by businesses and firms. It could also lead to private sector companies to go public as they may not have another choice, which would give the government more control.
Pros
even income distribution
no social injustice
secured public goods and services
property rights and welfare opportunities for those who cannot afford
can regulate monopolies and promote competition
Cons
Government failure
Lack of incentives
Political pressure groups
Less choice
impact of personal freedom
Examples of Government Intervention During the Coronavirus Pandemic:
Government has intervened in the market by delivering billions in bailouts to airlines and other distressed industries while haltingly commanding General Motors and 3M, through the Defense Production Act, to manufacture ventilators and protective masks.
Placing curfews and fines in order to make sure everyone who is stepping out of their home is protected and is wearing masks and gloves in order to stop spreading the disease.
Various governments like the UAE have had hotels clear out rooms in order to make room to put people in quarantine.
Countries like American and UK have eased taxes and student loans by giving people an extension in time to pay them back due to the severe unemployment rates.
Shutting down sports events like the Premiere League in order to avoid the spread of disease.
Some countries like India have provided smaller businesses with loans to keep the from bankruptcy.
Long-Term Effects
After the Pandemic people still may avoid purchasing as many goods as often as they used to as the backlash of all the unemployment will still remain.
People may be more cautious while traveling or may decide to reduce or avoid any unnecessary commutes. This would impact airlines, cruise companies or any other travel agencies, which may lead to mergers or converting to the public sector
Pros
Benefits Packages
Job Stability
Work/Life Balance
Government gains control, may improve quality
Consumer needs likely to be prioritized / no social injustice
Cons
Less Pay
Administration Changes Can Have Dire Consequences
Lack of control
Possible decrease in profits
Lack of incentives
The Pandemic may have helped introduce more innovative ideas, especially in the technological department.
Online schooling becomes more common and the concept is now more known and cane used to provide a more affordable education.