What Does VUWL spell? - Financial Fitness with Alan Akina

21 Apr 2020 · 2 min

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1:35

In this short Wake Up Today segment, Alan Akina explains that the letters V, U, W, and L are shorthand for four possible shapes of economic recovery after the COVID‑19 recession. A V‑shaped recovery means a rapid decline followed by a rapid rebound; a U‑shaped recovery involves a sharp drop with a slower, 12‑ to 24‑month climb back; a W‑shaped recovery (double‑dip) features two distinct downturns before a full recovery; and an L‑shaped recovery is the worst case, with a steep fall and a prolonged, possibly decade‑long stagnation. Akina notes that even experts cannot predict which path the economy will take. He then offers three concrete actions families can take to protect themselves regardless of the macro outcome: (1) set and adhere to a tight budget, (2) avoid taking on unnecessary debt, and (3) look for ways to supplement income or pivot financially. The segment ends with a sign‑off for the Wake Up Today series.

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Good morning, gang. What does VUWL spell? Well, nothing really, but it is very important. You see, these letters represent the possible recovery that our economy will make coming out of COVID-19. Let me explain. A V-shaped recovery is a recession that takes a sharp decline followed by a sharp rise back into the economy. Now, this is the one that we should be hoping and praying for. Now, a U-shaped recovery is when there is a sharp decline followed by a gradual rise, typically over a period of about 12 to 24 months. Then there is a W-shaped recovery, also known as a double-dip recession because the economy will drop twice before it hits a full recovery. An L-shaped recovery is probably the worst that can happen. Now, this happens when there's a steep drop in the economy followed by a very slow recovery. This can take place over a decade or more. Now, I have to say that no one really knows what will happen. Even the experts aren't sure if it'll be a V, a W, U, or an L. But each of you can plan for your own family's economic recovery by doing these 3 things. Number 1, set and stick to a tight budget. Number 3, don't take on more debt than necessary. And number 3, find ways to supplement your income. Now, be creative and open to making a pivot in your financial life. For Wake Up Today, I'm Alan Akina. See you on Thursday.