For the last 10 years, we have had a booming global economy. Currently, we have a global panic and this economic growth looks as if it is coming to an end. The party is finally over! Globally, we are facing a very big economic downturn and we have reached to a point where everything has begun falling apart. The economy has come to an abrupt halt as supply chains break and anxiety spread all over. Millions of businesses have been impacted by the supply chains disruptions and this has triggered the biggest economic meltdown since the 2008 global financial crisis.
CEO’s of various American companies that rely on Chinese supplies are complaining because of the decline in output. Imports have drastically dropped and there is a very high risk that thousands of employees will be laid off because of this slowdown. Many businesses in the United States cannot do business with foreign suppliers especially those from China and this is affecting the operations of hundreds of businesses.
Many economies have been affected by the current economic conditions and economies like the United Kingdom, China, United States and Europe will be affected in a big way. Literally the whole world is in an economic trouble. It looks like we will experience a global economic collapse if this trend continues. Interest rates are headed to zero or even negative because the Federal Reserve has already begun cutting interest rates. They have also expressed the willingness to continue slashing the interest rates if this economic slowdown continues.
Hundreds of global companies have been hit in a big because their operations have been disrupted. This has lead to reduction in sales and economists are expecting that the global output will shrink by $2.7 trillion by the end of this year. Probably for the first time in the last 10 years, the global GDP will reduce by several trillions of dollars.
Business travels across the world have been affected and big companies like Amazon. Facebook, Microsoft and Apple have restricted their employs from travelling overseas. Business executives from various companies also cannot take business trips to manage company operations in foreign nations. This is delaying many projects and companies are losing billions every day. In some of the US companies, employees are being forced to work from home and restrictions are being imposed in various companies. Travel has been halted for the corporate America and the consumers and as a result the whole travel industry might be headed for a major collapse. This means that hotels. Airlines, cruise ships and restaurants will see a very sharp decline in the number of customers. Companies are entering into a period where they will report the lowest income in a decade.
Over the years, China has turned out to be a very big player in the global supply chains and the whole world is connected to the Chinese manufacturing sector either directly or indirectly. This means that the current disruption is supply chains will affect the whole world. This will be felt in weeks to come as warehouses that are spread across various places dry up. Many firms and businesses are currently experiences a big decline in their operations and some are almost to a point where they will be forced to shut down their businesses. Billions of dollars are being lost and it looks like the world has been hit by the worst economic storm in history.
What most people don’t understand is that if the current panic continues, all the supply chains will be disrupted. The world economy operates like a one big machine that becomes totally worthless when one part of the whole system is removed. In our case, the supply chain is a very important part of the whole machine. The disruption we have now might culminate to the destruction of the whole global supply chains and in case it happens, the whole economic machine will come to a stop. Just like a normal chain, the global supply chain is a s strong as it weakest point within the whole link. It does not matter which link it is, but even if the smallest link breaks down, the whole global economy will cease to function. This will trigger the biggest economic collapse in history where thousands of companies will go bankrupt and millions of jobs will be lost.
Over the years, we have always believed that if one country loses, there is another country that will gain economically. This is not the case this time. If production in China has been affected, even the United States economy will suffer because we have hundreds of businesses in America that rely on Chinese supplies. So far we have seen hundreds of businesses across America and Europe that are at a risk of shutting down their operations because of this disruption. In this case, all countries are losing!
If production will be halted for long, we might see price hikes as important products become scarce. Equipments and spare parts which we need on a daily basis might become unavailable soon because of this disruption. If we use everything we have, it will become impossible to get new products. If this happens, many companies will run out of business and this will literally cripple the whole economy. America has already made a big mistake by putting all eggs in one basket. Greedy CEO’s have already outsourced the production of key products from China where we have cheap labor. This is backfiring and it is already haunting American companies. The disruption is supply chains are making it impossible for the United States to get vital products from China and Japan. It is hurting but this is the wakeup call that the US needs to stop relying on other countries for some basic products. Investing billions is China is a bad decision by America and it does not make sense for the United Sates to have such a big trade partnership with China. While rushing to exploit cheap Chinese labor, American companies have been re-industrializing USA for the last 30 years by transferring most of their operation to China. With the current disruption in supply chains, this has turned out to be a horrible idea. Right now thousands of American businesses and companies are suffering and the whole economy is at a blink of a collapse.
We have had a good 10 year business cycle that has been kept afloat for all that time by quantitative easing even if the united sates economy has been slowing. The current disruption in supply chains is pushing the whole economy to an edge. American companies are suffering largely because of the bad decisions they have made in the past. With no products to buy, even the Federal Reserve can do very little to help the economy. Economists are warning that we might have a global economic meltdown. Many companies have already reduced their short term expectations and many economic analysts are already estimating a decline in the global economic growth. Just a few months ago, we had what was considered a healthy economic expansion but now we are at a point where the economic output has declined rapidly. Companies are expecting the lowest turnover in a decade because of this contraction in the whole economy. Purchase of various consumer goods has declined and the whole economy has constrains in supply and demand. Many companies have been forced to downsize their staff because of the sharp decline in the demand of their products. The Federal Reserve is also under pressure to relieve the current economic meltdown before things gets out of control.
Last month, the Chinese PMI dropped from 50 to 35.7 points-marking the lowest lest level since 2004. This significant decline in the Chinese manufacturing has affected many American companies whose production is done in China. Right now these companies have little hope that the supply will rebound and this leaves these companies at a vulnerable place. It will not be a wonder if some of these companies begin filling foe bankruptcy if the things will remain as they are now. The Federal Reserve finds itself in a difficult position when it comes to addressing the current economic slowdown. They might have to cut interest rates further to stimulate spending. However, this will not help the economy recover because there is no inventory available and at the same time many businesses are shutting down.
The whole global economy is now going through a serious meltdown. Companies are reporting catastrophic performance because of the disruption in supply chains and at the same time consumer consumption is declining. For example apple has announced that they are expecting lower quarterly earnings that what was previously expected. This is just a glimpse of how many companies have been affected by this global economic slowdown. This is just the beginning and probably in the next two or three weeks we will see the full economic impact of this global economic turmoil. An economic meltdown will hit in full force and we might find ourselves at a worse condition that what we experienced in 2008. Hundreds of companies will go bankrupt and the global output is expected to drop to record lows. The panic has already begun! The stock market is also plummeting and the Federal Reserve has already begun cutting interest rates as a way of boosting the dying economy. If the administration does not act swiftly to save the United Sates economy, thousands of jobs will be lost as companies shut down their operations. The US economic is not in a good place and an urgent solution is needed; otherwise we will have to face a horrific economic meltdown!