Could a severe pandemic cause a severe recession?
Posted: Thu 18 Mar 2021, 14:05:36
I have an understanding that many recessions are caused by energy price spikes or energy shortages. In the Great Recession/GFC of 2008, the root cause of that crisis was the shortfall in energy supply (particularly oil) to demand which resulted in a huge price spike resulting in a significant increase in energy prices. As energy prices increased, consumers cut back on discretionary spending resulting in lower economic activity which eventually led to the Global Financial Crisis.
I also believe that a severe pandemic could also cause a severe recession or even an economic depression far worse than the 2008 crisis even in an absence of an energy crisis or expensive energy let say in a scenario where the world depends mostly on cheap unlimited from cold fusion. This scenario would happen if the world has no viable plan B to manage this crisis. In the worst case scenario in a severe pandemic, consumers cut back drastically on discretionary spending due to the fear of getting ill and supply chains breakdown. The following effects that would occur are listed below.
-Mass Unemployment at over 30 percent, even at over 50 percent
-Supply chains are disrupted due to pandemic which results in a drastic rise in prices of goods including food or goods being unavailable
-A global financial crisis which could be far worse than what happened in 2008/2009 resulting from debts unable to be serviced due to low consumer spending or unable to conduct business due to severe supply chain breakdown.
-An unprecedented biblical wave of evictions and foreclosures as the unemployed are unable to pay rent or mortgage.
-The severe ongoing economic effects and supply chain disruptions could make it impossible to respond effectively to the pandemic.
-Waves of business failures occur. Even large fortune 500 companies fail.
-Unbound monetary collapse- if currencies lose their value in their nation of origin, they can no longer be exchanged for foreign currency. International value chains collapse as well.
-Disintegration of regional political ties, new alliances, political upheavals, or even dozens of failed nations could result from this crisis.
I also believe that a severe pandemic could also cause a severe recession or even an economic depression far worse than the 2008 crisis even in an absence of an energy crisis or expensive energy let say in a scenario where the world depends mostly on cheap unlimited from cold fusion. This scenario would happen if the world has no viable plan B to manage this crisis. In the worst case scenario in a severe pandemic, consumers cut back drastically on discretionary spending due to the fear of getting ill and supply chains breakdown. The following effects that would occur are listed below.
-Mass Unemployment at over 30 percent, even at over 50 percent
-Supply chains are disrupted due to pandemic which results in a drastic rise in prices of goods including food or goods being unavailable
-A global financial crisis which could be far worse than what happened in 2008/2009 resulting from debts unable to be serviced due to low consumer spending or unable to conduct business due to severe supply chain breakdown.
-An unprecedented biblical wave of evictions and foreclosures as the unemployed are unable to pay rent or mortgage.
-The severe ongoing economic effects and supply chain disruptions could make it impossible to respond effectively to the pandemic.
-Waves of business failures occur. Even large fortune 500 companies fail.
-Unbound monetary collapse- if currencies lose their value in their nation of origin, they can no longer be exchanged for foreign currency. International value chains collapse as well.
-Disintegration of regional political ties, new alliances, political upheavals, or even dozens of failed nations could result from this crisis.