Early 2020s Recession

The **COVID-19 Economic Recession** (also called the **Early 2020s Recession**, the **Pandemic Depression**, or the **Great Lockdown**) was a global economic downturn that lasted from February 2020 to 2022. It was the worst economic crisis since the Great Depression, eclipsing the Great Recession of 2008.

## Background

### Overview

Following an economic slowdown during 2019 that saw a stagnation of stock markets and consumer activity, the lockdowns embraced worldwide in response to the COVID-19 influenza pandemic resulted in mass economic panic throughout the world.

The first known case of COVID-19 was identified in Wuhan, China in December of 2019. As global supply chains were reliant largely on products exported from China, the virus spread across the planet rapidly. The crisis coincided with the onset of the 2020 stock market crash, which saw major losses of 20-30% in February and March of 2020. As the markets fell, stimulus packages were signed into law by governments around the world, prompting a revival in Keynesian-style economic policy that had mostly fallen out of fashion since the 1970s Stagflation Crisis.

Thanks to stimulus spending, stock markets began to rise by the end of the year. However, nations around the world experienced the highest levels of unemployment seen since the 1930s. Welfare state expansions were required to prevent widespread homelessness, as majorities of the human population were unprepared to cover emergency expenses even before the pandemic started. By September 2020, every advanced economy on Earth had fallen into either recession or depression, while developing economies were all in recession.

The first COVID-19 vaccinations were administered in December of 2020, with more widespread adoption occurring in early 2021. As more localities became vaccinated, it became safer to return to work. However, as the economies of many developed nations had moved toward running on low-wage service industry jobs, the paltry unemployment payments many had been receiving were comparable to or higher than what they would have received had they worked. Restaurants, grocery stores and gas stations responded by raising wages and offering hiring bonuses to prompt workers to return to work. Employers raised objections to the unemployment payments, claiming that they were making workers lazy. There was a widespread fear on part of business leaders, particularly in the service industry, that workers would grow accustomed to those higher incomes which they received while on unemployment.

Governments responded to outrage from businesses by ending unemployment insurance payments, enacting new job-search requirements that would condition payments on one's willingness to search for work, and creating assistance programs that would provide childcare for parents who could not afford to pay for it themselves. This prompted more people to return to the workforce, but there was still a concern that it had been done too soon, as the world had not yet reached herd immunity. Meanwhile, there were persistent concerns regarding "breakthrough cases" (where a fully vaccinated individual could still contract and spread COVID-19.)

Nevertheless, as more people received the vaccine, cases went down, and unemployment declined with them.

## Recovery

### Stock Market vs. Unemployment

The concerns over the legitimacy of said market recoveries were abundant. Businesses were required to limit their activity to contain the spread of airborne coronavirus particles. Where possible, commerce and education migrated to remote settings through use of the internet. This resulted in a decrease in revenues for many industries (particularly any area of the economy that was reliant on in-person, human interaction.)

Many areas of the stock market had, effectively, been partially socialized through government-led bailout efforts. Industries such as cruise ship lines and amusement parks reached record stock market highs in the midst of the pandemic, despite their business activities being largely halted. As the stock market climbed, new unemployment records were reached, leading to widespread labeling of the economic recovery as a "K-Shaped Recovery," one in which the privileged few received the most government aid, while the masses of working-class people were left with relatively minimal assistance, or in some cases, none at all.

### Direct Cash Assistance

Governments around the world had largely embraced neoliberal, supply-side economics for over four decades prior to the pandemic recession. This high concentration of wealth, monetary aid, and power in the hands of a select few was blamed for worsening the tangible effects of the recession on the masses. The effects of the stimulus spending (inadequate as much of it was) had produced the largest increase in consumer buying power since the "Golden Age of Economic Expansion" in the aftermath of World War II. Unfortunately, this increase was temporary as the benefits tapered off over time.

## Aftermath

### The Decline of Supply-Side Economics

As people around the world saw how government aid was the only reason that so many of them did not descend into abject poverty, attitudes toward social safety net expansions shifted away from the supply-side status quo. The noticeable impact of the stimulus aid is cited by historians as being one of the key events leading toward the eventual collapse of the Reagan Era in the United States, and -- worldwide -- neoliberalism as an ideology.

### Financialization and the 2021 Cryptocurrency Bubble

There was an abundance of interest in day-trading and cryptocurrency transactions throughout early 2021. Some of this was simply fueled by a "get rich quick" mentality, while other segments of it had been fueled by animosity toward the wealthiest members of society (particularly in response to the economic realities of the era.) The GameStop Short Squeeze was seen by many as an opportunity to bankrupt hedge fund managers, who were seen as parasitic investors who were extracting money from the economy without providing anything of value to society. As stimulus payments and unemployment insurance were being distributed to people, some had used them to purchase shares in stocks and cryptocurrencies.

As further stimulus packages were signed into law, hyperactive interest in investments and day-trading led to massive overvaluation of cryptocurrency prices. This overvaluation was further egged on by Tesla CEO Elon Musk, who wanted to bring cryptocurrency into the mainstream. In May of 2021, the "Crypto Bubble" burst, leading some to sell off their investments, while others, unwilling to realize their losses, became long-term investors. The "trading frenzy" led to a continued interest in market speculation by so-called "retail investors" (average people who had little money to invest) throughout the decade.

Long-term investors saw their six years' worth of accumulated assets plummet in value in 2027. Some day traders had become so addicted to the rush of exploiting market volatility for potential gains that they were waiting for paychecks just to invest them into the stock market. Others were taking out loans for the same purpose. Former U.S. President Dylan J. Price referred to this six-year period as a "misguided and dangerous mainstream addiction to the wildcat speculative practices of Wall Street," and "excessive worship of the golden calf."

### Great Reset

Implementation of more centrist (or mildly center-left, at best) Keynesian interventionist policies would follow the pandemic. This culminated in the worldwide adoption of policies pursued by the economic thinkers behind the Great Reset, a worldwide economic cooperation project. The stated goal of these thinkers was to build a more "resilient, equitable, and sustainable" world economy. These policies would provide some relief to those affected by the pandemic recession, and they ultimately ended the recession by 2022. As helpful as they were, they did not provide the longstanding, transformational change that was needed to correct the conditions brought on by the supply-side policies of the prior decades.

The Great Reset, on a policy level, is seen by historians as being technocratic in nature and limited in scope. Regarding its American implementation, former U.S. President Alexandria Ocasio-Cortez referred to the Great Reset as "the absolute best that the Democratic Party could ever accomplish." Progressives and leftists around the world called on the political establishments in participating countries to go bigger and bolder than the plans for which world leaders had advocated. In response to these demands, there was a near-universal unwillingness to exceed the boundaries outlined by "old guard" politicians.

The Great Reset's failure to address the climate crisis ultimately discredited all existing political establishments around the globe. This collapse in public confidence amid The Flood and the Labor Shortage led to the Revolutions of 2027.