How Long Will The Recession/Depression Last?

[BFritz]

Thanks to this virus, we're heading into a recession and maybe even a depression, so, my question is, how long will it last? How long will it take to rebound?

 

I've seen estimates that say the curve could flatten by May, but likely July or August. Will things start to get better in the economy? How long will it take to rebound?

 

Will it last until a vaccine or cure is developed? I've seen estimates for a vaccine put at least a year.

 

Just trying to get some clarification about how screwed we are.

[TheDeuce]

I believe it will rebound extremely quick after restrictions are lifted.

[JDEaston]

Honestly I think it's too early to tell and we won't be able to tell until we are on the back end of this pandemic. Due to this being related to an unexpected health issue as opposed to bad financial practices, a wartime scenario, etc I do believe we can rebound rather quickly. It really depends on how long it lasts and that seems to be an unknown at this time..

[rjs4470]

The scary part is so many businesses are going to get crushed by this if it stretches into May. Yes there will be a lot of pent of demand, but so many businesses may be gone, and so many people might be out of work, it could take awhile for things to come back.

[GrantNKY]

Things will be almost completely back to normal by mid summer.

[John Anthony]

We’re gonna have a lot of spending PTSD. Some businesses won’t be back. I still don’t think we’ve seen the worst of what’s to come. The work at home movement was coming on strong before this, now companies might make it permanent.

 

I think it ends in June and we recover late in the year. We’re also assuming/hoping those laid off can go back to their old jobs. Christmas spending will be crucial.

[Bluegrasscard]

If we are not fully back to normal by May 1 - this will change the landscape of the country and the world forever. April 1 will be a very bad milestone for small businesses. Rents are due, payrolls due, this will be the start of the first real pain. Layoffs will accelerate, it starts to get bad. If we are in same state May 1, that may be a collapse that is not recoverable using any normal measuring method.

 

Sorry to be a downer but the economic pyramid starts with local businesses and local cash flow. And it seems all of that will be cut off after tomorrow in this state.

[MJAlltheWay24]

Don't apologize @Bluegrasscard. We need the brutal truth and hope for something better.

[rjs4470]

We’re gonna have a lot of spending PTSD. Some businesses won’t be back. I still don’t think we’ve seen the worst of what’s to come. The work at home movement was coming on strong before this, now companies might make it permanent.

 

I think it ends in June and we recover late in the year. We’re also assuming/hoping those laid off can go back to their old jobs. Christmas spending will be crucial.

 

And that's a big assumption. My company just laid off 25% of our workforce. It will take the better part of a year to be able to add that capacity back. And lets face it, once you learn to do without, some of those jobs will never come back. Most businesses aren't going to be able to just carry jobs and salaries when demand dries up because people aren't going out. Yes there will be demand when this breaks. But it will take time for companies to be able to completely fill that demand after being cut so far back.

[Randy Parker]

If we are not fully back to normal by May 1 - this will change the landscape of the country and the world forever. April 1 will be a very bad milestone for small businesses. Rents are due, payrolls due, this will be the start of the first real pain. Layoffs will accelerate, it starts to get bad. If we are in same state May 1, that may be a collapse that is not recoverable using any normal measuring method.

 

Sorry to be a downer but the economic pyramid starts with local businesses and local cash flow. And it seems all of that will be cut off after tomorrow in this state.

 

Spot on.

[Voice of Reason]

If we are not fully back to normal by May 1 - this will change the landscape of the country and the world forever. April 1 will be a very bad milestone for small businesses. Rents are due, payrolls due, this will be the start of the first real pain. Layoffs will accelerate, it starts to get bad. If we are in same state May 1, that may be a collapse that is not recoverable using any normal measuring method.

 

Sorry to be a downer but the economic pyramid starts with local businesses and local cash flow. And it seems all of that will be cut off after tomorrow in this state.

 

Not to be hard core in a uniquely bad time, but is any business that cannot survive a little more than one month of a shutdown truly a viable business? I think an aid package is coming and this crisis should be no excuse for going out of business. Businesses that go out of business will just be using the virus as a good excuse when they likely weren't going to survive anyway.

[DanvilleFan]

If there is a stimulus package for small businesses or something that can effectively float unemployment/business aid in the right direction, then I think the economy can rapidly recover from the lost production in these months. It's been incredibly disruptive, though.

[Bluegrasscard]

Not to be hard core in a uniquely bad time, but is any business that cannot survive a little more than one month of a shutdown truly a viable business? I think an aid package is coming and this crisis should be no excuse for going out of business. Businesses that go out of business will just be using the virus as a good excuse when they likely weren't going to survive anyway.

 

I can not name a business that would not have survival issues if you pulled two straight months of revenue out from under it. This would be especially true of of small local businesses.

 

The businesses and industries that are direct to the consumer will be the first to suffer and already are (B2C). The companies that provide to other companies (B2B) will fair better in the short term but as their clients and customers go under, then they too will falter.

 

Even healthy and profitable companies have most of their revenue stream committed to going out to ongoing expenses like employees, rent, raw materials, distribution. Reducing or having no profits is one thing. Not being able to pay the light bill is another. And without revenue for 2 or 3 months companies will have no way to pay those that they owe.

 

Cash flow is the life blood of any company. Turn off that cash flow for an extended amount of time and it does die. Very few companies can have their revenue stream completely shut off for 2 or more months, especially the small, local and family owned companies that are the foundation of the entire economy.

[Voice of Reason]

^ @Bluegrasscard

 

Most of those costs you list above are gone too. Don't small businesses keep a cash reserve and perhaps also have an accessible line of credit? What percent of costs were eliminated in the shutdown? Perhaps as much as 75% of costs eliminated for many businesses? If true, they need enough cash to cover 25% of their costs for two months. Don't businesses have enough liquidity after an 11 year bull market economy to cover that?

[rjs4470]

Not to be hard core in a uniquely bad time, but is any business that cannot survive a little more than one month of a shutdown truly a viable business? I think an aid package is coming and this crisis should be no excuse for going out of business. Businesses that go out of business will just be using the virus as a good excuse when they likely weren't going to survive anyway.

 

Cash flow is of utmost importance to any business. Many businesses run on small margins, and even if they have cash in the bank, losing revenue streams for any amount of time will cause huge problems, not just in the present in meeting expenses (some of which are fixed) but also in the future for reinvestment back into the company. Often those cash reserves are used deal with seasonal fluxes in business to be able to deal with seasonal spikes or downturns. Yes the unhealthy businesses will get hit hard and drop first. But losing revenue streams for any amount of time will push many healthy businesses into unhealthy territory.