Lockdown’s Job Losses Hit Young Hardest. One of every six people ages 18 to 29 has stopped working since economic shutdowns were imposed across nations, according to a survey conducted by the United Nations’ International Labor Organization (ILO).
The result translates to as many as 200 million young adults worldwide who have lost their jobs.
Persons in that age group who still are working report having their work hours cut by an average of 23 percent.
The shutdown is “inflicting a triple shock on young people,” the ILO said in a statement: their educations are interrupted, they are losing jobs, and there are new barriers to those trying to enter the workforce.
The global shutdown may create a “pandemic generation” that will spend much of its life trying to capture the income and career advancement it would have had opportunities to pursue if the world’s economy had not crashed, the ILO warned.
Before the pandemic began, global joblessness among young adults already was at levels higher than those during the Great Recession, with 75 percent working outside of formal economies.
“We started from a situation of great hardship” and the shutdown “has made matters considerably worse,” said Guy Ryder, the ILO’s director-general.
The total number of hours worked by people of all ages in all countries will fall by about 10.7 percent in the current quarter compared to 2019’s final quarter, the ILO said.
Such a loss could lop more than $8 trillion off the world’s GDP this year.
TREND FORECAST: The impact on young people’s employment will ripple through every sector of the global economy: fewer of the new generation of adults will be able to afford to buy homes or cars, the newest gadgets, next year’s fashions, or college for their kids.
Marriage rates will fall; crime and drug abuse will rise as these victims of the shutdown find it harder to escape from a reality that is far more bleak than the one they were ready to step into.
OECD Countries Pile on $17 Trillion in New Debt. The 37 member countries of the Organization for Economic Co-operation and Development (OECD), are set to create at least $17 trillion in new debt as they enact bailout plans to revive their national economies.
Among the 37, average government debt will climb from 109 percent of GDP to 137 percent and add $13,000 to the debt carried by each of the 1.3 billion people living in those countries.
Those figures will rise if the economic recovery takes longer than governments and analysts hope.
As the Great Recession took hold in 2008 and 2009, debt among OECD member nations rose 28 percentage points to $17 trillion. The damage done by the current global economic shutdown “is expected to be worse” than that, the OECD said in a statement.
During the Great Recession, many economists contended that government debt exceeding 90 percent of GDP was unsustainable.
While that has proven not to be true, most economists agree that higher government debt places limits on economic growth; the more money the government uses up, that much less capital is available to businesses.
As a result of the current financial crisis, more countries face a future similar to Japan’s after its financial boom ended in the 1990s, leaving it with ever-increasing debt piled against slow economic growth and an aging workforce, the Financial Times has predicted.
Japan’s national debt has stabilized at about 240 percent of GDP.
Negative interest rates in France, Germany, and the U.K. have helped minimize short-term damage from the lockdown but will invite inflation as their economies recover. Governments could cut spending or raise taxes but either could spark a recession, economists warn.
Governments should avoid either of those actions, Adam Posner, president of the Peterson Institute for International Economics, told members of the U.K.’s parliament last week. “The most important thing is to get the economy growing faster than the debt,” he said.
TREND FORECAST: Stimulus measures such as negative interest rates and “quantitative easing,” also known as pouring fake cheap money into national economies, will continue to push gold, silver, and Bitcoin prices up.
Cash May Become Pandemic Victim. Government warnings to avoid handling cash during the COVID pandemic is accelerating society’s switch to digital money.
The number of transactions at U.K. ATMs has fallen 62 percent during the economic shutdown compared to the same period a year earlier, with the value of cash withdrawals down by more than 40 percent in Britain and 90 percent in Spain.
Cash withdrawals rose in U.S. and Russia due to people’s impulse to hoard cash in the face of uncertainty, analysts said.
Since 2017, a majority of retail purchases have been made with debit or credit cards; cash has fallen to second place.
“We all knew there would come a point where society was virtually cashless,” said Natalie Ceeney, a British financial executive who led a 2019 study of cash’s future. “We thought it would be in 10 or 15 years; COVID might have accelerated that to next year.”
PUBLISHER’S NOTE: This new trend was thoroughly covered in our 24 March cover story, “FROM DIRTY CASH TO DIGITAL TRASH.”
Digital money allows banks, vendors, and others to gather, store, and sell information about the stores you visit, the things you buy, the online sites you frequent, and enough other data for giant corporations and government agencies to know you down to your shoe size.
