What Could Happen to the Economy if There Is Another Pandemic, And How Can You Prepare?
Written by
Nicole Spector
Edited by
Amen Oyiboke
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However deeply we may hope that there is not another pandemic, we must embrace the reality that another one could happen. In fact, many health and science experts say that it’s not a question of if but of when another uncontainable infectious disease outbreak will strike.
The COVID-19 pandemic caught the U.S. by storm and wreaked havoc on the economy. Though we have mostly bounced back from the slump, some devastating effects – such as high inflation, as tied to supply chain upheavals – linger.
We must know what could happen to the economy if struck by another pandemic. Would we get more stimulus money? How can you financially prepare for a worst-case scenario? Here’s what experts say.
Were Another Pandemic to Strike, We’d Likely See Similar Economic Devastation
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To refresh your possibly traumatized memory, the COVID-19 spurred the following U.S. economic disasters, to name but a few:
- Widespread job loss.
- Widespread closures of small businesses.
- A spike in poverty level rates.
- Supply chain disruptions.
- A rise in consumer debt.
- Cost the economy $14 trillion as of 2023, according to research from the USC Leonard D. Schaeffer Center for Health Policy & Economics.
We Would Likely See More Stimulus Checks and Interest Rate Cuts
When it became alarmingly evident that this pandemic was real and as catastrophic as any other of the past, the government acted by sending out stimulus checks and slashing interest rates. That would likely happen again.
“Looking back at the COVID-19 pandemic, we can see it caused significant economic disruptions, but we also learned a lot about how to respond,” said Tamplin. “Stimulus measures and interest rate cuts helped stabilize the economy, and those lessons could help us respond more effectively to future crises.”
Have an Ample Emergency Fund
By now you already know how important it is to have at least 3 to 6 months of savings set aside for an emergency – as personal finance experts constantly talk about it – but it could be the thing that saves you from total financial collapse in the event of another pandemic.
“Being prepared matters because if the economy slows down again, having a plan can help mitigate the impact on your personal finances,” Tamplin said. “For example, having an emergency fund means you have some financial breathing room if you lose your job or your income drops. It’s also smart to have more than one source of income if possible, so if one dries up, you’re not left high and dry.”
Double Down on Repaying Debt
Credit card debt skyrocketed amid the COVID-19 pandemic, so you want to do your best to get ahead of this debt sooner rather than later.
“Managing debt is another important piece of the puzzle,” Tamplin said. “High-interest debt can quickly become overwhelming if your income decreases, so it’s wise to try to minimize it before any economic downturn.”
Diversify Investments and Stay in the Know
Both new and experienced investors should be diligent in diversifying their investments, in case the stock market is impacted (it will be) and certain industries are hit harder than others.
“Diversify your investments across different areas like stocks, bonds, and real estate to lower the risk if things get tough economically,” said Dutch Mendenhall, CEO at RAD Diversified. “Spread your money across different types of investments to be safer. Stay updated on global news and tech changes to make smart investment choices.”
Mendenhall also recommends getting advice from financial experts to build an investment strategy based on your goals and your risk comfort level; this is particularly important if you’re new to investing.
Pandemics Aren’t the Only Catastrophes To Be Prepared For
Public health emergencies can be devastating situations for the whole world, as we learned all too impactfully with COVID, but they aren’t the only occurrences that can have profound consequences for the economy at large. Take war and climate disasters, for example.
“As one TikToker points out, 2024 is circumstantially reflective of 2020,” said Mendenhall. “Besides the social media ‘WWIII’ concerns or the passing of beloved celebrities, some very real events are already starting the new year. Natural disasters, ongoing armed conflicts, global shipping issues and national elections in 76 countries. Eight countries holding elections are among the ten most populous countries (Bangladesh, Brazil, Pakistan, Russia, India, Mexico, Indonesia, and the United States), which will affect 35%+ of the world’s population. Including the repeat of Trump versus Biden in the United States.”
Long story short, unthinkable global upheaval that directly impacts your wallet can happen at any time. We simply never know, and it’s naive to think we’ll always be safe. The best we can do is up our ante in preparing to weather even the worst of storms, and that includes protecting and nurturing our financial wellbeing.
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