What Happens If Most Businesses & Consumers Tighten Their Belts at the Same Time?

In April and May 2020, the Bank of Italy conducted a special survey of Italian households to collect data on the financial situation and expectations of households during the crisis linked to the COVID-19 pandemic. More than half of those surveyed said their household income had shrunk as a result of the measures adopted to contain the epidemic. The impact has been particularly severe on the self-employed. Over a third said they did not have enough liquid resources to cover essential household expenses for a period of three months. Households’ expectations regarding spending have also been affected by the economic situation: more than half of those interviewed believe that even when the epidemic is over, they will spend less on travel, holidays, restaurants, cinema and theatres than they did before the crisis.

The Bank of Italy

What Happens If Most Businesses & Consumers Tighten Their Belts at the Same Time?

Answer:

Not good.

 

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