The Wuhan coronavirus has caused unprecedented worldwide disruption.
America and other countries have literally had to shut down their economies.
Here’s how to prepare for one possible economic depression.
The enforced shutdown of the U.S. economy due to the Wuhan virus will undoubtedly throw the country into a recession.
A recession occurs when the economy contracts for two consecutive quarters.
Job loss and unemployment claims have increased exponentially as businesses have been forced to shutter against their will.
It’s unimaginable that the economy will rebound in the next quarter, so we are most certainly in the midst of a recession.
In some ways, the Wuhan virus accelerated a trend that was already happening. Years and years of irresponsible spending and artificially low-interest rates created a bubble in the economy that has now burst.
But the big question is whether or not the country is headed for an economic depression, which is measured in years, not quarters.
An economic depression would devastate the country, as it did in the 1930s. And unfortunately, the country took away the wrong lessons from the Great Depression.
Franklin Roosevelt’s unprecedented expansion of government and constant meddling in the economy actually extended the depression, something even left-wing historians and economists admit today.
However, that hasn’t—and likely won’t—stop politicians from repeating some of the same mistakes.
Regardless, there are some steps you can take to protect yourself from a possible years-long depression.
First, you cannot operate on the assumption that your primary source of income will be stable.
If you can find extra revenue streams, such as selling off old items in storage or starting a side business, now would be a good time.
There are plenty of skills you can learn relatively quickly that could come in handy.
Next, do your best to save a rainy day fund.
The majority of Americans cannot handle a $1,000 emergency, and unfortunately, many of them found that out the hard way in light of the coronavirus.
There’s no excuse for getting caught in that precarious situation if you can help it.
Make sure you squirrel away some money for legitimate emergencies, which are much more foreseeable now that the global pandemic has taught us how fragile our routines are.
Also, now would be a good time to cut back on frivolous expenses. If you’re paying for monthly services that you hardly ever use, cut them loose.
Paring down a few subscription services could save you hundreds of dollars a year.
And if you don’t do it already, track every single dollar you spend so you know exactly where your money is going.
Compare your habits pre and post-shutdown to determine what your new baseline is.
Finally, don’t panic. There’s a big difference between preparation and panic.
For example, if you’re in the stock market, don’t feel the need to pull out. In fact, now is a great time to buy in.
If you’re willing to be in the market for the long haul, invest in good, durable companies, and sit tight as the market rebounds.