History has taught us that economic collapse always results to a societal collapse as people become desperate. As people lose their incomes and livelihood, they become desperate and this is what creates mayhem in the society. In recent months, the global economy has been collapsing as a result of the outbreak and in the process; millions of people have lost their jobs. At the moment we have unemployment rates that are similar to what we had during the great depression in the 1930s.
The current real unemployment rate in the United States is already past the 20 percent level and economists are estimating that the Gross Domestic Product (GDP) will shrink by more than 38 percent in the second quarter of the year. These numbers signify that the current economic condition is worse than the great depression where the GDP numbers had shrunk by 30 percent and the unemployment rate had hit 20 percent. This is an indicator showing how bad the economic situation is in the United States. Even if the stock market is rallying, this is not an indicator of the real economic situation in the US. The economy looks bad and the wild swing being experienced in the Dow indicates how unstable the economic numbers are at the moment. The stock market is inflated and still very far from the previous highs we had at the beginning of the year. We have a very confusing situation because the market is rising while the real economy is shrinking but ultimately time will tell whether this stock market rally is real or fake. But we have high chances that this is an inflated market rally because the economic numbers being released are still ugly. It will not be a surprise if we see the stock market crash again in the coming weeks.
In the US, the economy is shrinking and a failing economy means that there are very desperate times ahead and probably this economic collapse will result to a war just like it has happened in the past where tough economic situations preceded a war. The current outbreak is accelerating everything not only in the US but all over the world.
The stock market is trying to rebound and this is raising hopes that we might see a V-shaped recovery. This means that the collapsing economy will recover very fast and economic indicators will rise back to normal in a quick pace just like they have plummeted quickly in the past few months. In reality, these are just projections by the so called experts and they do not take into consideration the real situation on the ground. We have very many unknown facts about this outbreak; we might have the second, third or even fourth waves of this outbreak and maybe these subsequent waves will have a bigger impact than the first wave. This means that we have very low chances that the economy will recover very fast and instead of having a V-shaped recovery, we might see a L-like economic progression in the near future maybe until there is a proven medicine.
At the moment, there are many predictions that look pessimistic but they are more realistic when it comes to predicting what will happen with the economy in the coming months. Most experts are predicting that we will end up having a slow, U-shaped recovery and in this case we will have no real economic pick any time soon; this will end up being a long economic downturn that will take a lot of time to recover. For instance, when we look back at historical data, after the 1929 stock market collapse, it took many years for everything to recover and the market was able to go past the 1929 peak many years later in 1954. It took many years for the economy to recover after the great depression and this time, we have high chances that this slow recovery trend will repeat itself.
When we look at the history of most wars, it is very clear that economic factors were the primary causes of those conflicts. Many revolutions have always been as a result of people being motivated by suffering, poverty an even starvation in some cases.
The United States also has many enemies like North Korea, Iran, Russia and even China. As the world teeters between a depression and a total economic collapse, some desperate regimes may end up resorting to desperate measures like war. On top of the pandemic, this is the biggest threat we have and this global economic fallout and trade wars are just accelerating the pace at which everything else is happening. The world is in a very tricky place and the economic situation may not get back to normal any time soon and even if economies were to recover, trade wars will continue haunting the global system and maybe this will lead the world to a war.