The coronavirus pandemic has set the wheels in motion for a global economic recession.

Now, economists are trying to figure out just how bad that recession could be.

In its latest World Economic Outlook report, the International Monetary Fund said the global economy could contract by as much as 3% in 2020. That’s a far cry from the 3.3% expansion in gross domestic product the organization forecast in January.

Banyan Hill Publishing economist and economic historian Ted Bauman said that the global economy is going to get worse before they get better.

Why is the Recession Going to Get Worse?

Bauman, Editor of The Bauman Letter, which aims to help defend against various threats to your privacy and wealth, said that while some economists and analysts suggest a quick recovery is in the offing, that line of thinking is foolhardy.

“They argue that big industries like automobile manufacturing might return to work as soon as May. But who is going to buy the cars they produce,” Bauman said. “By that time, we could have 15 to 20 million people unemployed in the U.S., along with millions more in Europe.”

A recession, by definition, is two consecutive quarters of GDP decline. While there has been no official word that the global economy is in a recession, Bauman — who is far from alone in this assessment — says the indicators are all there.

He said the priorities of providing lenders with capital and the Federal Reserve buying debt is the wrong direction for the federal government to go.

“The fact is that you need consumers with money in their pockets to get the economy going again. And the way things are going here in the U.S., that doesn’t seem to be a big priority,” Bauman explained. “Instead, most of the effort is going into protecting lenders by having the Fed buy up debt of all kinds.”

Worst Global Recession ‘in Our Lifetimes’

Ted Bauman coronavirus effect on retirement worst global recession

Banyan Hill’s Ted Bauman

According to the IMF study, advanced economies, like the U.S., Germany, Japan and the U.K. will take the biggest hit to GDP, contributing to a deep global recession.

The report indicated U.S. GDP will drop 5.9% while the Euro area (Germany, France, Italy and Spain) will drop a collective 7.5%.

In all, advanced economies will see GDP fall by 6.1%.

Emerging markets won’t be hit quite as hard.

In fact, the IMF projects GDP actually growing in China and India by more than 1%. However, Russia, Mexico and Saudi Arabia will experience dramatic downturns to their GDP.

Bauman said unless government priorities change, the recession will only get worse.

“Ultimately, unless and until policymakers realize that getting money quickly to ordinary people is the key to surviving this, we are headed for the worst global recession most of us will ever see in our lifetimes,” Bauman said.

There is, however, some good news. IMF chief economist Gita Gopinath said GDPs should rise in 2021 at a higher rate than initially forecast.

“A partial recovery is projected for 2021, with above trend growth rates, but the level of GDP will remain below the pre-virus trend, with considerable uncertainty about the strength of the rebound,” Gopinath said in the report.