The United States unemployment has reached over 3.3 million in a matter of weeks as more and more people are being laid off during the COVID-19 crisis. This may seem like a small fraction of the US population of about 328 million people however the effects have not been so small.

Why is this so alarming?

• The last time that the US experienced such a catastrophic crisis was in the 1930s during the Great Depression. During this time unemployment was as high as 10%. The real GDP for the US also declined by 18.2 percent.
• During the recession unemployment reached a little over 660,000, compared to 3.3 million

Real GDP = (Gross Domestic Product) which tells us what a county’s economy is worth due to the number of goods and services that they produce, adjusted for price changes ie; inflation.  

What may be a little terrifying is that economists are comparing the current situation to the Great Depression. Further, this situation is stated to be worse than the times of the Great Recession from 2007 to 2009, during the financial crisis.

Recession? Depression?

These two may seem almost the same because an economic downturn occurs in both cases. This means that the economy slows down and unemployment increases.

With a recession, a country’s GDP continues to decline for a period of more than 2 consecutive quarters. A depression is basically a recession that lasts longer.

For people who have lost their employment, these are certainly trying times, however, it is important to understand that this may stretch out longer. Hence, people must prepare for rainy days with their emergency funds, cash on hand, and less liquid assets.

The good news is that we are in this situation because of a health crisis. It is very clear how we got here. Regardless of how frightening this may be when COVID-19 cases start to decrease and people can return to their jobs the economy will have money being generated back into the economy as people regain confidence and peace and spend more.