As much as we all hate to admit it, this coronavirus stuff isn’t going anywhere anytime soon, at least not for the next few weeks, possibly even months. And as it continues and businesses and social events are shutting down, we have to understand that the economy will undoubtedly be affected. However, it may not be worth all the panic.

Now, you might be asking, ‘How can that be, I’m going to be off work for a while and will be without a paycheck? And businesses are closing; some may never reopen.’

And I understand that. You will be affected, as will plenty of businesses, even with the help of the government. Industries and markets such as food and travel will suffer more than most.

So the fear is that because some businesses and people will be making less, the entire economy will fall as national spending decreases. But that isn’t necessarily true.

First of all, this will not last forever, nor will we be unable to recover from it. And it certainly doesn’t mean the market as a whole is going to come crashing down around us within the span of a few months.

To understand this, we have to look a little closer at economics and realize that while spending in some areas may definitely decrease, it may be somewhat offset as spending in other areas increase.

Take COVID-19 related spending, for example. Restaurants, bars, sporting events, and most entertainments in many states are becoming unavailable to the public. In addition, people are afraid of leaving their homes and are pretty much staying there, except for work and necessities.

But people are still spending their money. All you have to do is look at all the empty shelves in most groceries to realize this. Spending on foods with a long shelf life, toilet paper, house cleaners, bottled water, and hand sanitizer are through the roof.

And as schools, classes, and in-office meetings are being canceled, e-learning services, high-tech video conferencing devices, and online courses are being bought up at extraordinary rates.

Online entertainment is also skyrocketing. Those who didn’t have time or never considered it before are suddenly subscribing to online video channels, Netflix, Hulu, Disney+, and so many more.

Think about how many families you know that usually go on spring break. And yet this year, they are unlikely to, even if they had planned to just a few weeks prior. That money is now being spent elsewhere, maybe putting in a new game room upstairs, buying an elliptical, or getting a new pool installed.

And since we can’t go out to eat, people are buying more groceries and even teaching themselves to finally cook. The rates of online cooking classes and shows have gone through the roof in recent weeks.

So as you can see, money is still being spent; it’s just being done so in places that may have been a little more neglected before.

Another thing to consider is Nobel Prize-winning economists Milton Freidman’s ‘permanent income model of consumption.’ Freidman initially states that “permanent consumption spending is a function of permanent income.”

But what does that really mean?

Essentially, he says that everyone has was he calls a “permanent income” or an expected income during a certain amount of time. Based on this amount of earned income, most consumers budget their funds to allow for a specific type of lifestyle or “permanent consumption.” As long as things go as planned, you roughly spend x amount on food, y on entertainment, z on utilities, etc.

When short-term changes happen, Freidman says most people adjust their wealth to compensate. For example, in times of extra income or when yields are higher than expected, families tend to increase their wealth by either saving, paying off debt, or both. On the opposite end, when incomes fall short of the norm, people decrease their wealth by spending their savings, adding to their debt, or both.

Friedman makes the case that changing their budget, or the amounts spend in certain areas, is often the last resort.

So, in this case of decreased spending due to COVID-19 and its economic effects, most consumers won’t actually change how much they are spending, albeit in different industries. Instead, they will dip into their savings, take out a loan, or both. And with the government giving out stimulus packages, this is even more likely.

In the long run, jobs will return, businesses will reopen, and spending will soon be right back where it was.

31 thoughts on “Why Coronavirus Economic Downfall Will Be Short Lived

  1. I expect this to run it’s course in a month or two at most. There are several cures already developed and will be available soon to the general public.

  2. How much longer will it be before we senior citizens can go back and sit down for a decent resturant meal as personally I live in an apt. rooming room and prohibited from using the kitchen.

  3. This is nothing but a CON, being pushed on us by the Banksters to cover their greed and hope there will be a reset and to be able to blame the CRASH on this CONvirus..
    Pandemic… really.. what BS.

    1. I’m a senior and I think it is mostly BS. The flu kills more. The difference is this one really attacks older people’s lungs. My Doctor said take 50 -100 mg of ZINC every day because it rututres virus cells. Then he said he is ordering hundreds of doses of the Malaria drug and Zithromax. He thinks since there are encourages anecdotal outcomes we will get through this. Stay home for a few weeks to break the spread cycle. Kids are the worst because they don’t think or care about spread. Parents need to make sure they aren’t allowing their “Typhoid” Mary loose on the population and it should abate rather quickly.

    2. This is the anti-American democrats and their tools for it the bought out biased medias propaganda LIES doing , just to try and make President Trump look bad at every angle , they are using the medias as a tool spreading fear! The elites and the powers that be also can get more info on how to manipulate the masses to use to user in more anti-American agendas, taking away American rights and many more! The power of the press can only be strong as long as Americans allow it! The powers that be already think Americans are too lazy and dumb to go against while on the other hand actually fear it! Blind patriotism to corrupt politicians and others and the liberal lowering of standards to pacify all that hurts all could blind Americans to elites and have Americans to believe that any other party vote is wasted besides the 2 current corrupt system of government the r.i.n.o.s and especially the anti-American democrats and their tools the medias also the false mindsets that any government is too big to fight or fail! The people need to realize this!

      1. I, too, agree that a lot of the media hype is total BS, in an effort to hurt President Trump in the 2020 election! Democrats/liberals hate Americans and want us as they slaves! They want total CONTROL and POWER for their GREEDY, SORRY SELVES! How about we just stop paying taxes and leave their sorry a–es without any income! We pay the salaries of those low life thugs, and they hate us! It is time for a change in this country; the wrong people have control and it is time for “We The People” to get off our a–es and make things right again! God bless America and all true Americans!

      2. Wow
        Loved your line regarding “blind patriotism…”
        Well, this one, too:
        “ powers that be think Americans are too dumb and lazy…”
        Wonderful descriptions of the trump following cult.
        And when did the republicans suddenly not become the party of elites? Someone’s world is spinning the wrong way. It ain’t me!

    3. While I believe the ‘Beer’ virus will self destruct as most do by killing the Host the problem is HOW and WHY did it stay a State Secret for a month before being announced? The Virus should be named appropriately the CCP ( Chinese Communist Party) virus and even thought it SOUNDS like a conspiracy theory, the Chinese are still experimenting with biological weapons and It’s not beyond belief that this one escaped and after a month of cover-ups it’s time to BLAME America for the CCP. REMEMBER -America has been FEEDING China’s desire to become the Worlds Largest economy for years and our [Media?] have been complicit accomplices for decades and since the 2016 election have gone full Monty against anything the sitting POTUS proposes, IN SPITE OF an economy that is STILL the strongest in the World. Maybe it will take a full blown DEPRESSION to make that half of America that that believes HATE is the answer to curing the Worlds Problems to SEE what hate really destroys. Hate is being used as a synonym for PROGRESSIVISM or Socialism….

  4. The GDP is considered a good measure of the US economy, a great year the GDP would increase 4%. If the economy produces 0 for 5 weeks the GDP will be a negative 5%. The recovery will be years and every American will get to experience life as it was in 1934

    1. I hope that includes vile, wicked Nancy Pelosi and her pathetic posse! She needs to suffer right along with other Americans!

  5. Last ordinary flu season killed ten times more people all over the world as coronavirus is ever expected to with ten times more cases reported. So to all people everywhere, I say cool it and calm down. This mass hysteria is total insanity! ! !

  6. The differences between responses is exemplified by David Lake on one side & Theodore Pong, Donald O’Connor on the other. One says we’ll be at -5% GDP and living like it’s 1934 (in the middle of the Great Depression) and the others say we should stop worrying & we’ll have a vaccine. The real path is most likely between the two- we’ll recover within a year.

  7. Read today that many economists are predicting a 2nd quarter GDP growth rate of… -24%!!! That’s depression territory. Let’s hope the economic turnaround begins very soon.

  8. I personally think and have thought so since the beginning of this madness—that it is all an effort to undermine America’s prosperity and the president. The h1n1 virus infected more and killed more as does the flu every year, and no we don’t have drugs for each new flu that comes around! We have to come up with them as we had to dozens of times before! The flu kills anywhere from 20,000 to 60,000 people in the USA every year. Come on folks, this isn’t the black plague!

  9. I think this is totally being blown up . I believe the flu will kill many more people . I also think this Covid was purposely spread by the Chinese and possibly even with help from the dems . Look how the Lamestream media is reporting . China Knows they’re being put in their place finally and that terrifies them ! They are Soo desperate to try and hurt Our President I do Not put anything past any of them ! Too bad so sad it will Not work , we Will Re-elect President Trump !!

    1. And, yes, the Democrats/liberals are hoping that this destroys President Trump’s chances of being re-elected in 2020! They will do anything to regain control and power for themselves! And If they do regain power and control, life as we have known it in the United States will be gone forever! I will go to my grave believing that they worked hand-in-hand with China to spread this Coronavirus throughout the world! The Democrats/liberals are a deceitful, mean, uncaring group of sub-humans who only think of themselves! Workers of Satan and haters of America! Sickening!

  10. WHO report as of Mar 21- worldwide Covid-19
    167,013 cases, deaths – 11,201
    CDC report as of Mar 21 -Flu report for USA only
    34 million cases deaths – over 20,000
    Why are people panicking over Covid-19 !!!
    I’ll probably die from the flu before Covid-19. It’s a respiratory disease. Elderly people are susceptible to respiratory disease. That’s why the doctors tell us elderly people to get pneumonia shot.

  11. This whole thing is just to-o-o suspicious. It started last DECEMBER in China but nobody did a thing about it until now. Why the lag!?

    Now there’s a global panic not just a pandemic and it’s damaging basic society and our economies.

    I am not buying this rot that it got loose by accident. It got loose from the same bio-lab that does biological weapons research for the Chinese military. Yet they have the gall to try blaming it on the US Army! Who buys that besides Democrats?

    Unbelievable!!!

  12. sure is beginning to look like another democrat/liberal/communist scam.. aided and abetted by the lying,corrupt media !

  13. If the news media is reporting the truth, I think a workable vaccine for the Cronavirus or Covid 19 is suppose to be available in 1 year to 18 months. They supposedly have an 60year old anti-malaria drug called sadly, a name I cannot recall linking to Zithromax, which is available right now. These medications are currently undergoing animal and human testing to record potential side effects from both of these current medications.

  14. It was the Chinese government (Army) the developed the virus in a lab in Wuhan. Like the good communists they are, they released it among their own citizens, with intention of it spreading here. The intent was to defeat President Trump in November because the new trade deal he made with them hurt their plans for world domination via destroying the West economically. The elites in the Democrat Party (Pelosi, Schumer, who said on record they would do “whatever it takes” to stop Trump. They had full knowledge of this before it happened. They willingly let thousands of innocent people die to achieve power by defeating Trump. It won’t work. Within a month or so, a vaccine will be found, and their plans and complicity in this will be exposed.

    1. I agree with your post! Pelosi and her posse definitely had a hand in this, and I believe that they are working with and have been working with the Chinese in order to defeat President Trump in the 2020 election! If both those traitors and all of their followers dropped off the face of the earth, I would not shed a tear! How can people who hate our country and all Americans continue to be elected to run our government? Are their supporters crazy or just plain stupid?

    2. yes John ……. i fully agree that the Chinese created and released this virus on purpose, using some of that American professor’s work …….you know, they guy they busted up in Boston at the airport getting ready to leave the country with one of his Chinese grad student lab assistants, because he knew they were on to him……….. the other one left before them and made it back to China …..The one detail you left out of your comment was that China did this because they knew that with all our extra military spending under Trump, they could not beat us militarily. At best, it would be world war III and they would also be destroyed ……. they had to figure out another way, which they did ……. i also tend to believe that Gates and/or Soros may have contributed to this somehow …………. i believe they are both looney Liberals ……………. great comment though ……. you were spot on ……….!

  15. I will REMEMBER what the Democrats did AGAINST the economic relief package for coronavirus that they have STALLED in CONGRESS for their PET projects which have NOTHING to do with coronavirus. And I recommend YOU VOTERS do also, as they lose ELECTION after ELECTION. in 2020. Team Trump and his allies 2020.

  16. A couple weeks ago we were on the way back from the Philippine Islands and had a 13 hour lay over at the Inchon airport in Korea. The tour that we had scheduled for this layover was cancelled and we twiddled our thumbs, read and walked the halls of the airport. On the flight from Inchon to Seattle I felt something coming on, so the next morning I went to the doctor. “Non specific virus, flu” and a med prescription. The next day I think it was that they came out with the name for it. Has it debilitated me? No. I have stayed indoors at home most of the time. My 2 recent disasters were my camera going for a swim in the P.I. and the TV in the family room dying, and they were unable to fix it (waiting for parts).
    Norm

  17. People, stay calm, avoid hysteria and limit news watching to 5 minutes per day. This is flu season and the regular yearly flu kills about 20,0000 Americans per year. This too will pass.

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