Stock markets around the world are collapsing, and people everywhere are coming to terms with the fact that a global recession (depression?) is inevitable. In the chaos, the so-called “experts” and figureheads of the current world-order have been quick to point fingers, to shift blame onto anything except the system itself. Some blame Trump. Some blame the Federal Reserve. But overall, their primary target has been COVID-19, a coronavirus that grew into a pandemic over the first few months of 2020 and continues to spread.

This idea, that current economic troubles are the result of a random, “black swan,” virus has been echoed throughout popular media from every front. The New York Post, echoing Bank of America, says the coronavirus “sent [the] US into [a] ‘brutal’ recession.” Jerome Powell, Chair of the Federal Reserve, tells us that these “disruptions [were] caused by the coronavirus.” The S&P walked this same line. Even the self-styled “socialist” magazine, The Tribune, is joining hands with clearly more right-leaning media outlets in declaring this “The Corona Crash,” or a “Coronavirus Recession.”

The truth, however, is not so simple. It was obvious that the global economy had been headed into a recession for over a year before the coronavirus was even discovered, and any honest analysis would show that the signs were there far before that. The coronavirus may deserve blame, but it can only be held accountable for its role as a “last straw.”

Note: It is the purpose of this article to show that a recession was already inevitable before the appearance of COVID-19, but it is not within its scope to explain why that is the case. There will certainly be other pieces in the future aimed towards elucidating that.

Before COVID-19

As far back as 2018, a recession in the US, and in fact a crisis, was obviously on the horizon. Towards the end of that year, unemployment dipped below 4% and stayed there for quite some time. This alarmed many, as unemployment that low is generally associated with periods preceding recession, and it was actually just before a recession, about 50 years earlier, that the US had last seen levels like that. Debt, both public and private, had also climbed to record highs. It seemed so unmanageable, that certain economists were even saying that a loss of stability in the US economy would lead to a crisis “worse than the Great Depression” because of the mass of unpayable debt. By October of 2018, JP Morgan was already predicting a 60% chance of recession within the next two years.

Fast-forward to 2019, and things are looking even worse. Unemployment not only stayed low but actually sunk even lower throughout much of the year. Later, it seemed to peak. Job growth, wages, and hours worked were all seen stagnating, another common sign of recession. The sizable debt that scared so many economists before continued to grow and was breaking even more horrifying records before Spring. As things continued to go downhill, Trump’s trade-war with China (competition, remember, being a key component of our economic system) put further stress on the economy. Soon, all lights were red.

Standard Chartered reported that US oil demand was “consistent with a slowing economy.” Not long after, the International Energy Agency found the state of oil in 2019 to be reminiscent of the 2008 financial crisis. Several extremely important economic indicators (LEI, Cass Freight Index, and the housing market) all showed weakness, indicating something truly terrible was just around the corner. As transport in general slowed, the trucking industry in particular took a nasty nosedive.

One of the most reliable indicators of a coming recession, the inversion of the 2-10 year yield curve, was seen repeatedly towards the end of 2019. The related, though not quite as reliable, 30 year yield curve also inverted. To put that into perspective, 5 out of the last 6 times the 30 year yield curve inverted, there was a significant pull back (and often a crisis) in stocks shortly after. That means it has historically been accurate over 80% of the time, and the 2-10 year yield curve is considered even more reliable than that.

US GDP growth slowed throughout the year, and even the number given was inflated and misleading. By the end of 2019, it was really only consumer spending that “kept the economy going.”

The small bit of 2020 we got before the coronavirus outbreak did nothing to shake these fears. In early January, 97% of CFOs (Chief Financial Officers) thought that a downturn was on the way. Around the same time, CEOs largely agreed that recession was their biggest business risk for the year.

To step outside the US for a moment, and back to 2019, the rest of the world looked no better. China was sliding to record lows of GDP growth and trying desperately to manage colossal debt and shrinking production. Germany was struggling with negative and stagnant growth. Britain was also struggling with negative and stagnant growth. And other major economies like Japan (more on that) and India were also taking real beatings. In fact, “GDP for the eurozone (!) grew by just 0.1% in the last three months of 2019.”

In October of 2019, the IMF predicted 2020 would see the slowest global growth since the Great Recession.

On January 11th, 2020, declining profits signaled to experts that a recession was inevitable and rapidly approaching.

This was all before there was even a single confirmed case of COVID-19 in the United States. That wouldn’t come until January 21st, 2020.

And it should be noted that I only went back as far as I felt was needed to make our main point clear. Given the time, it would not be too difficult to draw a direct line from the 2008 crisis to this one. Given a few volumes, one could even sketch out the general laws that drive capitalism and make such crises inevitable!

The Impact of COVID-19

Now, this is not to say that the coronavirus outbreak has not had any impact on the economy. In fact, I myself predicted that it would rock the Chinese and global economies back in late January. But in a world where major markets are slowing down, contracting, and being subjected to rabid price wars, the impact of COVID-19 seems far less like the alpha and omega and more like one moment in a series.

It is hard to assess the exact impact that the virus has had on the economy so far, and it seems like news comes out every hour that invalidates everything we say now. But one fact remains. The global economy was headed into a crisis with or without this pandemic. It was inevitable, and it is only by understanding that inevitability that we can begin to truly grasp how COVID-19 relates to it.

The Virus & The Crash

The proper view, I believe, sees the coronavirus as a triggering event less than as a cause in itself. A spark can only cause a bomb to go off because the bomb contains within itself the potential to explode, that energy and makeup required to self-destruct. This is, after all, how most historic events happen. General processes and laws make certain conclusions inevitable, but it is only by chance or intervention that these inevitabilities realize themselves.

To illustrate that point, we could pick any number of historical examples. But one of the easiest to remember would be from Theodore Draper’s A Struggle for Power: The American Revolution. On page 169, Draper remarks that “The American Revolution could have happened without the Seven Years’ War, but not in the same way and at the same time.”

In a similar vein, we must acknowledge the role played by COVID-19, but we should not fetishize it or lose sight of the greater trends and factors that determined this newest crisis.

And regardless of their relationship, both COVID-19 and the 2020 crash will certainly wreak havoc on the working class. Let us remember that always, and let us remember that the solution to both is collective action. Organizing to overcome the pandemic and organizing to overcome global capitalism. Together, and only together, we will survive the outbreak and move beyond the breakdown.