If every country is in some sort of recession, shouldn’t the economy adjust accordingly as opposed to falling even more?
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What do you mean “Shouldn’t the economy adjust”？ As in, shouldn’t prices go down because everyone’s poorer?
Not really. You can think of the strength of an economy (this is very, very much on paper, especially with things like wealth inequality that I won’t get into) as “the total amount of resources available.”
If you have economic contraction, that leads to less goods/services, and higher prices.
Here’s a good way to imagine it. Imagine we found a gold asteroid, and had an infinite amount of gold. What would happen to the price of gold? It’d plummet. Everyone would be able to afford it, because there’s now a new resource more people can access, and technically, even though the gold is borderline free, the economy has still grown because you have more people buying it, and with their saved money they’re probably buying other goods and services as well.
In theory, when the economy is strong, we have more resources available– thus more people can buy them.
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