Americans are cutting back on spending as they plan for a recession that might not end until the coronavirus pandemic is over.
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The coronavirus recession hit the US hard and fast, shrinking the economy 32.9% in the second quarter alone, but some signs are beginning to point toward a recovery. Unemployment, while still abysmal (PDF), is starting to abate, and the stock market, despite a recent rough patch, is up overall since it crashed hard in February. A few financial experts have even declared that the end of the coronavirus recession may be at hand, while Jerome Powell, chairman of the Federal Reserve, warns that employment and economic health “remain well below their prepandemic levels” and that more aid is needed.
Economists are starting to warn of a possible “K-shaped recovery” that favors those with higher levels of education and income while leaving those with fewer advantages struggling. Many so-called “white collar” workers have been able to either transition to working from home or they’ve returned to the office with new safety precautions in place. That’s in stark contrast to restaurant servers and hotel employees, for example, whose industries have continued to decline.
Many of the protections put in place early in the pandemic, such as the $600 federal unemployment enhancement and the Paycheck Protection Program, have dried up, despite nearly 30 million US workers still being out of work. Food insecurity now affects an estimated 29 million US adults (PDF) and almost a third of all US families with children, and yet a federal food program is still set to expire Sept. 30.
Without a second stimulus bill in the works, what does the road to economic recovery look like from here? We’ve put together the latest news about the coronavirus recession, where to find help, what makes a recession and the government’s response. Note that this story is intended to provide an overview, not to serve as financial advice. It updates frequently as the situation develops.
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Next stimulus checks: What to expect
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Latest coronavirus recession news
Where to find additional personal finance resources
If you’ve experienced financial hardship as a result of the coronavirus recession, here are some tools to help you regain your financial balance.
America’s decade of growth is over. Now we face an economic plunge.
Sarah Tew/CNET
When will the COVID recession end?
From an economist’s point of view, a recession ends when certain market requirements are met, which some estimate may happen about midway through 2021. From a personal point of view, you might wonder most about your ability to work, pay your bills and secure your financial future.
Economists and health experts agree that the economy won’t fully recover until the coronavirus pandemic is contained — without triggering another wave of infections when lockdown measures are released. That’ll happen either through herd immunity, an effective treatment for COVID-19
, a coronavirus vaccine or some combination of all three.
Several vaccine candidates have shown promise in human trials. Even so, most people won’t receive one until sometime next year.
How the government has tried to prop up the economy
The $2 trillion stimulus package passed as part of the CARES Act in March represents the US government’s first attempt at thwarting a recession. The economic relief law included stimulus payments of up to $1,200 for most US taxpayers, as well as a loan program for businesses to keep paying their employees.
So far, efforts to pass another stimulus package have stalled, with most analysts’ hope for a deal prior to the November election dwindling by the day.
The Federal Reserve, however, has indicated it will continue to hold interest rates close to 0% until 2023, which often has the effect of encouraging more borrowing, which leads to more spending — and more spending generally improves the economy.
Spending money at locally owned businesses (while wearing a mask and maintaining social distancing) can help keep your economy afloat during the recession.
Jessica Dolcourt/CNET
How can I help others?
It’s easy to feel helpless, but if you’re feeling financially secure or have time to give, there are ways to make a difference. My CNET colleague Katie Conner has some excellent recommendations for things you can do to help your local community and businesses, including no-cost contributions like online volunteering or donating blood, as well as ordering take-out or delivery, and buying restaurant gift cards.
Other local businesses like bookstores, gardening centers, toy shops and boutiques may have a website where you can support them with a curbside order.
The best advice I’ve heard so far about how you can individually help prop up the economy is this: Spend to the best of your ability and within your means.