Why a recession WON'T happen
Show notes from Episode #173 of the Sweaty Startup Podcast.
A lot has changed over the past few months and people are scrambling to make sense of it all. To some surprise, there’s an increasingly more realistic scenario that this becomes the great recession that never actually happened in the United States.
Four weeks ago the sky was falling; businesses were struggling to survive, they weren’t getting their stimulus money, and everybody was uncertain about the virus. Now we see news about the virus being on decline, unemployed people are being subsidized, businesses have received their stimulus money, and the federal government has made it very clear that they’ll spend as much as it takes to keep the economy upright.
The impending debt crisis that Nick fretted about is a lesser threat now too, as there’s a good chance the US government sets increasingly low interest rates in order to continue to encourage borrowing. This will keep the many people who use debt as an economic tool afloat financially and keep them spending money, which promotes the economy.
Unemployment is a concern, especially since people have stopped their spending. However, will this blip on the radar really get Americans to slow down their spending and lower consumption long-term? The lower class has more money that they’ve ever had through unemployment and stimulus benefits, and businesses are getting relieved as well so they can remain standing until the crux of this is over. Every politician wants to be a hero right now, and they’ll spend money like crazy to push us through this.
There are still a ton of distressed properties and businesses, but service businesses will run back up. Consumers won’t all of a sudden start mowing their own grass or fertilizing their yard if they weren’t doing that before; Nick’s brother runs a lawn care company and his client base has been largely unaffected here.
The oil standoff remains a concern, as do higher education and the travel and hospitality industries. These may see a bigger impact, but not enough to shove the country into a recession.
Stocks are nearing record highs today because people are confident of the government’s safety net policies and the long-term behavior of Americans.
But then again who knows?