Why 2025 Will Be the Worst Year Yet for the Economy
You think many people assume that, with the economy on the rebound, we are doing okay and it’s safe to relax again and be less frugal. Unfortunately, though, practically, they are wrong. But the economy will not pick up until 2025 and by then we will be in another recession that will feel even worse than the last one did, which was bad. Here is why we think 2025 will be the worst year yet for the economy.
Negative interest rates will probably hurt the economy, which is already struggling. The problem with negative interest rates is that they can discourage people from spending money, especially if they require paying a fee for keeping their money in savings. If consumers stop spending and businesses are not producing enough products to keep up with demand, this could lead to high unemployment and economic depression.
The rise in inflation in China, India, and other countries will lead to a rise in prices worldwide. As supply shrinks, we will see an increase in products with shrinkflation — that is, things that cost less but have smaller sizes or contain less in them. That will mean an increase in our purchasing power as consumers, but it will also mean a lot of change on our end. We will need to buy more each time so we can get the same amount out of it.
The macroeconomics of our world will be in complete disarray. The US, UK, Japan, and Germany will see their economies lose steam. Consumers will demand fewer goods and have less disposable income to buy them. Industrial production will decrease as corporations focus more on protecting their bottom line rather than innovating or expanding into new markets. Stock market prices are sure to drop as pessimism spreads among investors.
The problem with a lot of these economic predictions is that they are focusing on macroeconomics, but microeconomics is what matters. For example, we can have a country with a huge GDP, but if it is not creating jobs or producing anything in terms of exports, then that means nothing. The USA has been exporting less and less as time goes on and our trade deficit keeps going up, which means we are losing money in both directions: imports and exports.
In 2025, the U.S. government will owe more than $50 trillion in debt. This astronomical number could lead to a serious inflation problem that would devastate the economy and make it difficult for anyone to get by. The interest rate on loans from banks would go up significantly as well, which would make borrowing money more expensive. It is possible that by 2025, prices of goods in the U.S. could be three times higher than they are now (or even more). As far as India is concerned, the amount of government debt is not high as the developed nations like the US, UK, Germany, and others. The most positive move taken by India is that the Indian government never cut the taxes for the high-income group as well as the middle-income group. Here, the Indian exchequer never has a dearth of money for any contingency, but developed countries like the US, UK, and other developed countries’ economies are very much prone to making happy the high-income group with a big tax-saving soap as well.
As time passes by, the intensity of economic chaos is getting a big turnaround. Again, the government debt journey is becoming a long trail to surviving this hard time. More government debt is rising, and more people will carry the burden of it through their pockets. Even so, you will see that investment awareness will begin to lose its foot as time passes. Furthermore, it will cause a sharp increase in disinterest in investment because people will want to survive with their limited financial stock and will want to spend less as their income sources dwindle. We found that when people have a surplus in their income, they will think about investment as their future contingency plan. But when people are forced to survive on their low income, then there is no question of investment. You should know that no investment and no money are available for the government to continue their economic planning and execution as well.
If you think about people’s lifestyles for surviving this hard time, then people will have to live a simple and controlled lifestyle to overcome it. Moreover, developed countries like the USA, the UK, Germany, Japan, and other rich nations will have to cut their lifestyles in such a way that they can prevent any kind of economic collapse. One thing you must keep in mind is that Asian countries like India, Vietnam, Singapore, and Thailand, will be much safer than the western rich countries. The reason is that they have the same food habits, ethnic patterns, and cultural roots. Even so, you will see that this region will be far away from the food crisis during the 2025 economic hardship as well.
Therefore, the 2025 economic chaos is a warning signal for us to make ourselves more cautious of the hardship that is developing on the distant horizon and prepare ourselves to face it with resolute focus and a fertile mind.