US RECESSION 2021

us recession

Is the United States of America moving towards recession? Probably too late to ask this question; let’s rephrase that. Has the United States of America entered the recession? Flashback to 2018, ask any economist/finance expert about the situation today. Tell him that in 2021, the U.S.A. will see soaring money supplies and havocs caused by supply shocks. He will call you a madman. It is what it is. Three years ago, 2021 was expected to be a year of bliss and bounties, not what it is like today. Well, thanks to Covid-19.

STAGFLATION

U.S.A is under stagflation. Stagflation is a combination of stagnation and inflation. It occurs when a country is going through high inflation and has high unemployment rates simultaneously. The U.S. economy is suffering due to this phenomenon. During recent times, U.S. dollars have been flowing in the market rapidly. The number of dollars in the system has been increased by simply printing more money. During the pandemic, the unemployment rate increased at a great velocity. This eroded consumers’ purchasing power and the economy suffered. Now, when printing more money doesn’t decrease unemployment, which it surely didn’t; it inflates prices. 

UNEMPLOYMENT

However, the unemployment figures in the U.S. have been decreasing over the past year or so. It does look positive, no? However, there is a twist. On the one hand, unemployment is decreasing, but on the other hand, the labor force is not improving. So where are the employees? Quitting. Unemployment figures do not consider people who are not searching for jobs, and this is the state in the U.S. An average, four million people are quitting their jobs each month in the U.S.A. and are not into finding other jobs. A lot of job openings have been created. And this, my dear friends, is stagnation..

INFLATION

USA’s inflation has also been on the high side. As the economies reopened after the pandemic, the productions failed to meet the unanticipated increase in demands. Following that, prices of commodities increased. Due to this supply shock, consumer purchasing power eroded, and inflation saw a new high. Moreover, the stock market has not been performing very well. Experts predict that the market will further decline in the coming months. All the top stocks have led to the decline, including top technology stocks. 

EXPECTATIONS OF US ECONOMY

The expectations of the U.S. economy are not very encouraging, and a recession is expected by 2022. The signs are already glimmering with potential stagflation. But one thing’s for sure, this recession will not only impact the U.S. but will also affect worldwide. 

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