The US face its worst dip in GDP amidst the global slowdown triggered by the Covid19 pandemic. A dip of 32.9% was recorded from April till June. The statistics was formally given by the Bureau of Economic Analysis.
During the spring the US economy faced a big downfall as the nation was on a lock down. America witnessed the worst recession in a span of 11 years. This downfall is predicted to pull down the economic growth that America gained in the last 5-6 years. When two consecutive financial quarters face a dip in the Gross Domestic Product (GDP), the situation is termed as recession. The GDP in the US dipped by almost 5% during January to March 2020.
However, the current economic recession and as the US face its worst dip in GDP, the nation is facing is much worse than a normal one. The downfall in public health due to the Covid19 Pandemic has affected majority of the working-class American. Most of the middle class population are facing severe financial crisis. It is estimated that over 20 million people are temporarily jobless in this Covid19 pandemic scenario in the US. During the lock down the people were on a compulsory stay-at-home. The job loss is the biggest of its kind in recorded history after 80 years. The unemployment rate in US is now almost at 11 %.
The Struggling small Business sector in the US
The Covid19 Pandemic has in effect affected each American. Small business houses were closed temporarily and employees were asked to stay home. The average consumer spending level is less as people don’t have money with them. Since consumer spending is one element of economics that keeps America moving, this dip in spending affected the economy. Consumer spending declined by 36.4% during the first quarter of lock down.
Economic recovery will take time
The US government has declared booster packages to stimulate the dipping economy. A whooping trillion-dollar package is expected to bring things back to normal. Employment opportunity generation, loan offers direct credit to people are all part of the booster package. However, experts analyze that the weakened economy wont recoup soon, as many verticals are still non-operational and the Pandemic threat is not yet over.
India affected too
In India most of the corporate sector as well as the medium and small business sector are all paralyzed. As all the reserve resources are slowly getting exhausted, most of the entrepreneurs are struggling. Hi tech industry is the only one that is least affected. Information technology and related areas have not struggled much. Main reason is that they were mostly operating for customers in the US. Few other companies are owned by US entrepreneurs. As the economic situation worsened in the US and news of recession are sprouting, these companies might also be forced to limit operations. IT sector is one of the biggest sectors offering employment for technically employed youth of India. The coming months will definitely determine the future of High tech / IT industry in India as well.