How Consumers Can Help the Economy Recover
3 min read
We’re bringing you some information on what WE as consumers can do to boost the economy amidst this coronavirus pandemic.
As states begin to reopen their businesses and create game plans to slowly return to a regularly functioning economy, many consumers may be fearful of going out and being exposed to society too quickly after over a month of social distancing. Other consumers may be itching to get out and about, seeking any opportunity to return to a normal pace of daily life.
Germany, Europe’s largest economy, began to open up some of their businesses last week. CNBC reported that there were no crowds, no lines and overall, not a lot of shopping, not because consumers necessarily fear for their health, but because they fear for their finances.
Which way will the United States economy react upon a slow reopening of the economy? The country is torn- many say the economy will quickly recover once restrictions have been lifted, while others say that the return to a financially stable economy will be a slow crawl.
Of course, common sense tells us that when people are not out and spending money on entertainment, special events, vacations and other forms of nonessential expenditures, businesses and the economy will suffer as a result of this lack of sales. Right now, small businesses especially are struggling to stay afloat during this economic shock. It is crazy what a few weeks of hardly any activity can to for a company and the economy as a whole. Rather than entering a recession, some economists are calling this phenomenon the “Great Suppression” due to the unique circumstances, like being told to stay inside, avoid large gatherings and overall not having the opportunity to spend money on nonessentials, rather than a slow decline of economic activity as in a recession or depression. So what does this “Great Suppression” look like for the economy? Well, not great.
Stock market shares have taken a big hit since the closures have been enacted. People are hardly considering the buying and sharing of businesses at this point in time because everyone is simply trying to stay healthy and obtain the everyday goods needed to live. Since the start of the coronavirus outbreak, stocks have plummeted.
In addition to the stock market being affected, citizens’ own wallets are being tremendously changed right now. The unemployment rate has skyrocketed as a result of the businesses having to either shut down or lay off their employees for the time being. The graph below shows the unemployment claims this year from just January to April.
The loss of globalization for many of these American companies has greatly taken a toll on markets within the nation. As a result of the travel ban, many companies have not been able to complete crucial parts of their daily jobs, putting their corporate lives at a standstill. When one large nation like China is affected by such an extreme pandemic, all of the others who rely on products and services from them suffer as well. This goes for any country who has a special product or service that other nations rely on. As other nations ahead of the United States work to drive up their economy again, globalization has the potential to be a key ingredient in boosting the economy, according to Foreign Policy.
Before outside factors play a role in recovery, what can consumers do in the meantime to help the economy?
Spend money! This is key as consumer spending accounts for nearly 70% of the nation’s GDP. The Balance even refers to consumer spending as the “single most important driving force of the U.S. economy.” No pressure everyone.
Many consumers who are still employed are not spending nearly as much as they would be because of the increasing unemployment rate and the uncertainty that it creates in everyone’s mind. It makes sense- when people are unsure about the state of their jobs, they tend to save as a precaution. It is important to understand that spending money will help businesses stay alive, which can keep people employed who in turn will spend money and keep the cycle going. To learn just how much consumer spending affects the economy, check out this breakdown by The Balance on Consumer Spending and Its Impact on the Economy.
So if you’re ready to help boost the economy, take a look at some ideas on how to do so:
Order takeout from a local restaurant.
Are you hungry for dinner, but don’t want to cook? Order from a nearby, family-owned restaurant, and they will provide you with the same takeout or delivery meal that you once ate while dining in there a few months ago. This will tremendously support the local businesses who need every penny that they can get right now to pay their employees and keep the business functioning.
Shop online or buy gift cards for local businesses.
Even though we can’t go out to shop, who says we can’t shop from our couches? Remember, consumer spending drives the economy and improves the American business sector. Say you love a small book store around the corner from your house, but don’t have any books in mind that you would like to read right now. Purchasing a gift card to acknowledge your appreciation for their services can really help them through this crisis and also get you a book or two when you are ready to read a new one!
Help fund displaced workers.
Are you one of the lucky ones who has some money to burn right now? If you want to help out greatly to other families nearby and the American economy, providing funding to the displaced workers who have lost their jobs due to the shutdown would be a great way to give back. Employees in the service industry work long, hard hours every day to give us the luxurious benefit of living the American dream. Giving back to them helps in more ways than one!
Donate goods to nonprofit organizations.
In the spirit of giving, try to pick up a few extra canned goods or nonperishable items at the grocery store next time you venture out, and donate them to a local food bank, homeless shelter, or other nonprofit organizations who may be struggling to bring in donations during this time. You will be helping the business you buy from and the nonprofit all in one.
Save for necessities, but don’t forget the purpose of stimulus checks.
If your finances are fairly stable but you’re afraid to burn through the your income or government assistance because of the uncertainty of the future, Forbes notes in their 6 Things To Do With Your Covid-19 Stimulus Check, “remember: The government is hoping to boost consumer spending by sending out these stimulus checks. In a way, spending money right now and keeping cash flowing through the coffers of small businesses is a patriotic duty”.
On behalf of Consumer $ense, we wish each and every one of you well and hope that everyone is staying healthy!
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