DENVER (KDVR) — The FOX31 Problem Solvers have expert advice on how we all can overcome economic hardships during this pandemic.
With government shutdowns, stock market dives and an unemployment explosion, economists say the American economy is likely heading into a recession. Blunting the curve of new COVID-19 cases is creating major financial hardships nationwide.
“The stock market is truly on track for a horrible quarter,” said Chris Hughen, associate professor of finance at the University of Denver.
Hughen notes a recession is a real possibility. His colleague, Mac Clouse, says the pandemic impact could be even worse.
“This may be serious enough — and extended long enough — that it’ll be a depression rather than a recession,” said DU finance professor Mac Clouse.
Both Hughen and Clouse say now is not the time to be pulling money out of the stock market. History shows the stock market has provided an annual return of 9.6% on average since 1900.
“If you can stick to that long run plan, you are more than rewarded for suffering the short term volatility,” Hughen explained.
In the short term, Clouse says multiple stimulus packages are needed from the federal government to help consumers, small businesses and large businesses.
For families struggling, it's time to start prioritizing which bills to pay.
“It’s important to make sure that you have enough money for health care, to pay for food in the short run,” Hughen said. “Your family obviously needs to survive in the short run.”
With protections against foreclosures and evictions, paying the mortgage or rent a month late might be necessary. And while saving may not be possible right now — once the pandemic is over — Hughen says it’s important make a commitment to save.
“They need to have six months of savings set aside in cash, in an account, that they make a solemn promise not to touch in good times,” he said.
Those looking to retire soon will likely need to work longer.