A recession is an economic term that points to a significant decline in general economic activities and performance in a designated region that lasts for six months and up to several years before returning to their long-term growth trend. According to Jim Chappelow, recognizing the economic decline, it is actually reflected by GDP (Gross Domestic Product) which is related to monthly indicators such as a huge rise of unemployment in a certain economy. GDP is the market value of all the finished goods and services produced within a country in a specific time period.
Recession is normal in the part of business cycle. It is characterized by a number of business failures, slow or negative growth production, and unemployment. The economic pain caused by recessions even though it is temporary can have major effects that alter an economy such as to firms, industries, technologies fail, sudden change in social and political resulting from widespread unemployment and economic distress.
The spread of Covid-19 epidemic and decisions of lock-downs in 2020 is the perfect example of the type of economic shock. This resulting the tipping point of the economy turns into a downturn. “The spread of the disease has sent financial markets into a tailspin despite some of the biggest emergency stimulus measures since the global financial crisis announced by dozens of central banks across Europe, the Americas, Asia and Australia.” said Reuters. Economists research have cut their growth outlook over the past month and increased their predictions of recession in most major economies.
“Our first piece on the virus shock was titled ‘bad or worse’; now we amend that to ‘really bad or much worse.’ We now expect Covid-19 to cause a global recession in 2020, of similar magnitude to the recessions of 1982 and 2009.” Said Ethan Harris, head of global economics at BofA. The US economy is heading towards the shock of the coronavirus and there is still lots of unknown answer of the size and depth and the period of the shock.
As lockdowns forces factories to close and people to stop travelling, the global demand of WTI oil (West Texas Intermediate) for May 2020 futures has dropped to a negative state of number. Starting the day at $11.6 and ended at -$37 as holders of the future contracts tried to dump their contracts before oil is actually delivered with nowhere to store it. This discouraging state will not last for long because producers may accept prices below their variable cost. Sooner or later, a new balance between supply and demand will be established at prices that go through total average cost.
The great recession refers to the major decrease between 2008 and 2013. The recession caused by the credit crunch which by means the global banking system became short of funds, rising unemployment which leading a decline in bank leading. In 2000-2007, US banks made a big increase in mortgage loans with the belief that house prices would keep increasing. US mortgage companies then sold the mortgage bundles to bank around the world. Starting around 2005, US interest rates rose and people in the US started to get used to mortgages. Until then, US banks and banks around the world later know that the mortgage they bought were actually useless so, banks around the world lost many values of their assets. This has led to global financial crisis.
How media potrays the issue
During economy recession, media plays a huge role in most aspects. In situation like Covid-19, the internet remains as the best media and overcomes other media during such a period which provides the data and statistics of cases during the pandemic. Speeches by leaders such as president or prime minister about news and updates are stream using TV and the internet to maximize the prevention of the coronavirus.
The media provides informative content of the economy and also predictions by economists towards the recession. During recession, price of essentials and needs may be unstable, the use of media such as TV, newspaper, radio is crucial to update the people in a certain country.
Impact of the issue towards media
The economy recession can greatly help to develop digital media. Consequently, advertising duration had to be shortened and this will lead to a competitive struggle between media companies to survive in this unpredictable, constantly changing environment. The internet will continue to grow despite the the global economic crisis. However, magazines and newspapers or the printed version of the media will face hard times as people will try to prevent from overspending their money because of their current economy state.
“The coronavirus was already expected to take a toll on global ad spending even a few weeks ago, with eMarketer projecting a decrease of $20 billion.” (Kali, Hays, 2020). It is still going down as the lockdown drags on. Global spend in advertisement is highly linked to Growth Domestic Product growth. Because of this, online ad spend will have higher volatility as it can easily turned on and off. TV also generates tons of profit. As in 2020 the year when the Olympics is supposed to be held, TV earned a lot of ad spots project because of the postponement of the massive sport event. Be it digital or printed, the media seems to be in the state of ups and downs.
Impact of the issue towards people
During recession, the news of unemployment figures will always be on top causing people to work hard to stay afloat in the hope for the economy will grow back to normal soon. Job loss affects the financial state and health of the families and individuals. “While many who lose their jobs use the time for growth and exploration, many suffer with depression, alcoholism, and denial.” Said David Cuilty, an economist.
Lifestyle changes is also one of the many leading impact of recession towards people. This factor happens because people cut their expenses such as extracurriculars activity and monthly entertainment subscription in order to succeed in managing their essential needs. Families must try to adapt and understand that children may not fully understand about their financial crisis that has been affecting the family. Families are also has been given the opportunity to spend some quality time with their family. This by means that families can be inviteful in working towards an activity such as exercising.
Last point is education. Families can cut their expenses and worries in sending their children to universities or school. The college experience has turned upside down for them as many colleges tend to do classes online. Students can also apply for student loan or scholarship during recession to try to lessen the burden in this critical moment.
In conclusion, the economy recession can lead to many impacts towards media and people. Most of the printed medias will be in dangered moment and it will be a winning point for TVs and internet. While in Covid-19 case, the media should be precise and sharp in delivering their message and information as misleading share of information can lead to serious and unruly act of behavior by people. The media should also prepare for worse situation especially for the printed versions during recession. Having a backup plan is very crucial.
People should always be positive on how the economy is being acting. As there is always an opportunity inside losing. Failure in managing their position will result loss of assets. People especially families should always listen to the governments order as it is very important in order to grow the economy back to their normal state., work together, wait for economy stable, Individual and families should manage their expenses in recession in order to survive because the price is in unstable state.
We can conclude that recession will bring more to the negative side than the positive both to the media and people. In long term timeframe, economy will always recover from their downturn.