How Will the Economy Recover from This Pandemic?

Today’s Wisdom:

No one can predict exactly how the economy will recover from this pandemic, but we can consider a few different possibilities. Joel explains the most common types of recoveries and what that might look like for our current crisis.

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What You’ll Learn:

As we move into the third month of the coronavirus shutdown and the subsequent financial crisis, we’re looking at this from two perspectives: what’s happening now and what will happen later.

Many people want help navigating this turbulent time, but they also want to know when the recovery will come. What will it take to get the economy back on its feet and how long is that going to take?

Those two questions are so important, but no one can pinpoint the exact timeline. That’s what makes a financial crisis so difficult to endure but know that better days are ahead. To help give you a better idea of how recoveries typically look, we’re going to run through those possibilities on this episode of Money Wisdom.

Joel Johnson has years and years of experience and understanding when it comes to the market and the economy, so we wanted to have him explain these recoveries:

  • V-Shaped
  • U-Shaped
  • W-Shaped
  • Hockey Stick

Joel will explain what each would look like and which shapes last longer. Remember that we’re talking about the overall growth in the economy, not just the stock market. The market could make a quicker recovery, but this crisis consists of multiple layers.

We’ll also go a little deeper than we normally do on the podcast by really breaking down how the economy works and why the swift reaction by the administration gives us the best chance at a quick recovery. Joel does a great job explaining the intricacies of our financial system, which will hopefully give you a better understanding of what we’re dealing with.

Mailbag

Let’s also spend some time taking your questions during this episode. A lot of people are looking for guidance right now, so we’ll hit the mailbag. The first question comes from a recent divorcee who is dealing with a new financial future. What should they do with the money they received in the settlement?

The second comes from an investor that is thinking about buying cruise ship stocks right now since they’re at extremely low levels. Is this a good idea? What should they be considering?

[0:19] – Four types of market recoveries based on shape.

[0:39] – The V-shaped recovery.

[1:47] – The U-shaped recovery. Is that still a possibility?

[2:31] – What makes a W-shaped recovery happen.

[3:33] – How does the hockey stick recover work?

[4:48] – The administration’s reaction to this crash has been swift and gives us the best chance to come out of this quickly.

[5:52] – How the system almost seized up.

[7:56] – Mailbag Question #1: I’m recently divorced and have just received money in a QDRO as part of our settlement. What are my options for what I can do with this money?

[9:45] – Mailbag Question #2: I’m thinking about putting a large portion of my savings into cruise ship companies. They’ll eventually start sailing again and prices will go back up, right? I’m willing to wait.

[12:00] – If you need to have a conversation about recovery, here’s how to do it.

{“type”:”block”,”srcIndex”:6,”srcClientId”:”4e24e06c-6433-4ec9-942a-7b26b982ce16″,”srcRootClientId”:””}Thanks for listening to this episode. We’ll be back again next week for another show.

Final Thoughts:

“At the beginning of this downturn, everybody was saying oh it was going to be a V-shaped recovery. I haven’t heard that in a long time. Nobody thinks this is going to be a V-shaped recovery. They think this going to be a long while before we get back to normal.”  

– Joel Johnson, Money Wisdom Podcast
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