More restrictions have been put in place

Updated: Nov 2, 2020

COVID-19 is having a massive effect on the Global Economy, even if it is not felt yet on everyone’s household budgets. From cancellation of sporting events, music festivals, cultural and religiousgatherings to the restriction and closing of travel between countries, international trade is being severely disrupted.

While this seems like a boon to local brands, fewer consumer goods being sold means fewer purchases, which means lower business profits, which in turn means less income to hire and pay employees. With this basic understanding of the chain reaction that leads from lower trade to smaller or fewer paychecks, you can generally expect a slowdown in the global economic to last more than a month or two. Many economists expect the financial effects of the COVID-19 pandemic to cause greater economic stress than the 2008 housing market crash.

As explained in ‘Money Fit’ Individuals who work for businesses heavily involved in international trade have felt the impact most directly, with loss of bonus and other incentive pay often followed by furloughs and possibly even temporary or permanent job loss. This is worst-case scenario, of course, but it is not uncommon, even in the current state of diminishing panic coming from government, business, and other societal sources.

As the economic contraction turns into a longer-term economic recession, you can expect high unemployment figures to continue, along with lower wages as more job seekers compete for fewer available jobs. However, given the broader stability in the economy prior to the pandemic, long-term recovery seems certain, although what it will look like is still up for debate. 

With all major sporting events and seasons cancelled (Olympics, NCAA tournament, the NBA, the NHL and MLB), and the Premier League and other league sports banning physical attendance, fans of the games are not surprisingly disappointed. However, such drastic measures will have a direct negative affect on many more people than just the employees at the venues or of the teams. Employees of the companies that depend upon these events will feel their own economic contraction. From vendors and retail shops nearby to hotel and airline companies to many in the gig economy such as Uber and Lyft drivers, cancelled events will mean no side income or no income at all. 

Although unemployment has skyrocketed, it is still of note that the direct impact on most households may be relatively limited and somewhat temporary in-scope as long as life can return back to a ‘new type of normal’ within the next couple months. Beyond that we cannot know what the financial future will look like as we are facing an unpredictable situation that cannot simply be rationalized by simple numbers.

New lockdown measures are being in initiated. What happens if we cannot work due to continued restrictions?

Income should therefore a concern for everyone no matter what your position within a company as everyone has bills to pay, relative to their lifestyle. 

If your clients are looking to generate income from their available funds contact us….

Accruvis Investments Solutions

#Accruvis #FixedIncome

105 views0 comments

Recent Posts

See All
Need more information? Contact us:

We are here to assist. Contact us by phone, email or via our social media channels.

© 2021 by Accruvis Distribution Ltd

  • Black Facebook Icon
  • Black Twitter Icon
  • Black LinkedIn Icon