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| Name | Recession 2022: The Biggest Economic Collapse? |
| Video Uploader | Video From Global Economics |
| Upload Date | This Video Uploaded At 07-11-2022 11:59:30 |
| Video Discription | Just two years after the pandemic, the global economy is once again confronted with difficult challenges. Fears of a global recession are growing as growth slows sharply due to high inflation, supply chain constraints, and higher oil prices as a result of the Russia-Ukraine crisis. Between 1970 and 2021, the global economy experienced five recessions: in 1975, 1982, 1991, 2009, and 2020. And now in 2022 we might face another one, starting with the US economy with its high inflation rate. This high inflation is now suffocating the US economy's growth. This year's inflation rate peaked in June at 9.1%, the highest in the last four decades, and began to slowly decline by July, March, and September, reaching 8.2%. This was the result of the increased money supply in the economy during the pandemic, in the form of reducing the interest rate and injecting money into the economy by the stimulus checks. You see changes in money supply can take months or even years to materialize into the economy but this sudden injection will have ripple impact, which in this case is inflation. But this inflation can also be controlled by the Fed, by increasing the interest rate. When borrowing gets costly people usually don't take loans due to high interest rates and the money supply in the economy shrinks which helps to curb inflation. That is what the Fed and many other countries are doing now. But there is a downside of rising interest rates though, it starts the chain reaction of bad things in the economy. As the interest rate goes up the cost of borrowing also goes up and it gets difficult to take out loans and pay back at a higher interest rate for many corporations as well as for the government. And at the same time the demand in the economy could also go down so the corporation could lose their income and the government could lose the tax income. This started the either recession or stagflation. That is why this could be a worse recession than the one in 2008-09, because the government cannot assist defaulting corporations, banks, and other institutions this time because governments are already deeply in debt as a result of the high spending during the pandemic. Yet rising interest rates are not just a problem in front of the US economy but it is also causing problems all over the world. Because the US economy is the largest economy and the dollar is the world reserve currency. And if the US raises interest rates, the dollar strengthens while all other currencies weaken. This is especially bad for developing countries like India, Bangladesh, and Brazil, which rely heavily on imports rather than exports. Other smaller countries with limited foreign reserves often go bankrupt. A few countries have already begun to feel the effects of a stronger dollar. Because many countries rely on oil for economic activity, a rise in oil prices means higher transportation costs, which automatically raises the price of every product. Europe, the largest importer of Russian crude oil, is particularly hard hit, as it struggles to maintain economic growth as a result of high oil prices. You see in the past we have seen recessions and there is one thing common in with all of them. That is when the recession hits many companies lay off employees to cut down their expenses. People are not losing jobs but they are getting ones, the unemployment rate is not rising, it is constantly decreasing. This is something new and it has never been seen before. Some of the reasons behind this are the profit margins of many companies are at nearly all-time highs from the past few years and the amount of cash they have is more than 4 trillion dollars combined. This is providing a buffer for the companies and they might not lay off employees because of it. Another reason is, it is easy to lay off employees from the company but it's very hard to find one. Yeah, you heard it right the labor force participation in the economy is 40 years low and it is not only because of the pandemic, it has been declining for a long time. More people leave the labor force, more jobs are available and after the pandemic job vacancies have skyrocketed. But how long this job market can sustain well we cannot predict. But if the economy went under prolonged recession then we might see mass layoffs from companies. All of these figures indicate a slowing in global economic growth, but no one is talking about China, despite the fact that China has been the driver of global economic growth for several decades. Today, every economic indicator, as well as major financial institutions such as the IMF and the World Bank, are warning us about a possible upcoming recession, and if nothing changes, if inflation does not fall, the world may face one of the most difficult recessions it has ever seen. If that happens, it will not only push millions of people into poverty, but it will also change the world order as we know it today. #recession2022 #recession |
| Category | Education |
| Tags | recession | are we in a recession | unemployment | will i find a job in a recession | explainer | signs of a recession | history of recessions | lose my job | layoffs | what causes a recession | is the economy in a recession | recession 2022 | economic recession | 2022 recession | inflation | markets | causes of recession | recession of 2022 | recession news | fed | recession 2023 | next recession 2022 | next recession prediction |
