Everyone wants a V. But will it be more like a U or a W?
Could it really become an L?
But heres the thing about all those recovery shapes: Theyre pretty much useless to you.
Picture lines on a graph.
A V would mean a quick and steep bounce back from the depths.
A U would be a little slower, with a little more time climbing out up from the bottom.
An L would mean long-lasting pain.
But do you really care what the trends on some economists chart look like if youve lost your job?
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Heres what those recession and recovery shapes look like and when they apply to you.
It could happen if economic recovery continues, even if coronavirus cases continue to rise.
Many investors think were riding the V upward.
Thats one explanation for why thestock market has mostly ralliedsince March and the economy has continued to add jobs.
That V could easily turn into W, as well discuss in a moment.
A U could happen if we all feel a collective case of the jitters.
Of course if the economy starts shedding jobs again or job gains stagnate, that could lengthen the recession.
There are a lot of things you cant control right now.
Focus on building a plan.
That is, a recovery that begins only to be interrupted by another crash.
Dont count on another round of stimulus money to get you to recovery.
L: Doomsday.
The L-shaped recession is the one that gives economists nightmares.
Its the scenario where recovery stalls for years and when it finally happens, the scars are lasting.
If youre out of work for a prolonged period, its going to feel like an L for you.
She writes the Dear Penny personal finance advice column.
Send your tricky money questions to[email protected].
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