Your oh-so-excellent economy requires armies of uninsured, zero-savings, no-future, three-jobs, zero-buffer, deaths-of-despair gig workers to keep your larder stocked, your leaves blown, your meals cooked, your children cared for, your house cleaned, your sewers rodded, your hospital functioning, your Amazon packages sent. They can't afford a day off for self-quarantine. So they'll work sick and spread the virus to each other, you, and your colleagues.
Finally our sick economy and society will be visible to you -- as sickness in your own home and your own family.
37
While the NYT does not appear to be reporting this, yesterday CNN reported that the CDC is advising all people in vulnerable groups, including all over 60, to stay home as much as possible. If everyone over 60 hunkers down at home as much as possible, we are looking at a big fast economic slowdown.
13
Wait until the Summer job and employment numbers come in. Trump will be crying like a baby.
6
God saw that we might actually reelect Trump so he sent a demo of what a crisis looks like with him in "control"...
22
To follow on Ross Douthat's latest book, you know you're living in a decadent society when a mild flu shuts down the entire economy.
5
If the corona virus is responsible for trump getting booted out of office, the virus should be awarded a nobel prize.
20
There are some 300+ million of us, fortunately all doing somethimg different. If diversification is a good thing when investing, surely the average of the efforts of 300+ million results in somethimg more worthwhile than worthless.
Sure, tragedy is everywhere... but keep your head in the game. Keep your chin up. Invest in the future. Stay out of trouble. Waste not, want not. Always be setting somethimg aside for a rainy day, and everything is likely to be alright..
2
The epidemic we are about to experience coupled with stock values elevated by low interest rates and deficit financing, unaffordable and inadequate health care plans, along with cutting important governmental agencies is going to lead this country to a disaster. In the hands of the Trump administration too often facilitated by Democrats there is no bottom visible.
6
The economy is not strong, strong stock market performance fueled by a tax cut that allowed massive stock buy backs, continued QE and absurdly low interest rates are the clues. The hideous increases in corporate, consumer and government debt coupled with the unfunded pension liabilities of many entities will eventually come home to roost. When the crash does come people are always surprised but in hindsight the signs were always there, is this Pandemic the trigger this time?
11
Covid-19 will decimate America. This is extremely disruptive. Many Americans over extend their credit line. Covid-19 not only slow down economic activities across the board, the thinly stretched average Americans will file bankruptcies by the hundreds of thousands.
This is an economic tsunami just around the corner. It will be exponential and will be very visible in the next quarter. Just like China, Japan, S Korea etc, US will not be spared.
8
I believe the reason it could be severe is because the economy wasn't strong, it was weak and fake. You had the low interest. For what? For inflation and joblessness that wasn't there. It did destroy safe investments and push more people into the stock market, artificially inflating that. Then there was the tax cut that put huge sums of money in the hands of corporations who either just put it in a pile or bought there own stock, also artificially inflating the stock market. They sit on the cash today, because they know of nothing to invest in.
The market is juiced and has no real value. The fall should be far because a good amount of it will simply be a reset to reality, and then their will be the affects from the virus.
11
Chilling.
The only upside is that Trump won't get re-elected in a recession.
11
When did "donald" economic theory dictate that a multiple % return on your stock "speculative" venture should be guaranteed by the American taxpayer just as with a CD?
Having traded for decades I can clearly state that if donald elevates the American government into stock speculation "guarantees" the government has given even a clearer signal than the 1/2 % point panic drop in interest rates by the Fed that these folks have no clue what to do at this time and the house of cards is falling as we read this article.
donald has now, it is beginning to appear, done to the United States of America what he has done to his business career.
That would be took a unbelievable gift and totally destroyed it.
A potential pandemic is a hard reality for a grifter and his crew to overcome. Fox News can't even spin this one though Heaven knows they're trying.
I have to believe my point of concern was when donald, at the CDC in Atlanta, was very concerned about his prior evenings "ratings."
We have a real problem here and the stock market knows it.
7
“slamming on the brakes” is precisely what is happening on Wall Street and in the economy generally. The Trump Slump is happening because projected world production is the lowest since 2009.
5
You know what. Since Bill Clinton unleashed the stock market, things have been uncertain and painful for lots of people. Ditto since the clever and greedy and overpaid CEOs decided shareholders mattered more than their fellow Americans workers and relocated most of our manufacturing facilities for nearly everything in China and India and other --- favoring shareholders (gamblers) over workers and exploiting Chinese and Indian workers -- cheap labor market. What is actually made in America these days?
And then there was the cleverness of lowering the interest rate to protect the banks (and all kinds of sneaky legislation such as student loans cannot be discharged via bankruptcy).
So I hope the market takes a giant tumble.. Over the years with my expertly managed accounts-- Fidelity NOT -- I have actually lost money not making the say 200K that was there and vanished when help with the account was NOT forthcoming... Money in bonds... and I live modestly.. but well... However, while the market is tumbling my niece will get her first Roth IRA -- her father does not have the brains (and is greedy) and will not open one for her...
so.... let it snow...
Is a day of reckoning a bad thing? America seems to ignore its obligations -- e.g. "can't afford Medicare 4 all?" and all those people in the industry (middlemen no producers) out of a jog -- who worried about the factory workers?? I mean time to grow up learn to care and get it straight. BERNIE.
4
The stock market has become so, artificial, to so many. This idea of the Fed buying stock seems so repulsive, especially coming from the same mouths that are screaming to cut simple in most cases already paid for, survival type dollar figures for the masses.
That is simple, blatant, theft of Americans hard earned tax dollars to support the 18% of Americans who appear to believe "donald" economics has now thrown out centuries of economic theory and practice and replaced it with knee jerk reactions to every single "bump in the road" the stock market may experience. I suppose the idea that with CDs now essentially being worthless that even though stock trading is at the virtual peak of the "risk pyramid" and has always been volatile with abundant risk for all involved, we are to believe the Dow is the new "CD?" I don't think so.
As opposed to the Nixon era, "something's happening here." Problem is, this time, what it is is exactly clear.
4
Don’t let February’s job report fool you. A slowdown is happening as China is closed for business.
COVID-19 exposes how vulnerable we are to supply shocks in our globalized, interdependent economies. We can expect similar outbreaks to occur regularly in our overpopulated world, weaponized or natural.
The outcome will likely be a trend towards more local production, for better or for worse.
6
It’s almost like if a fire had ripped through a significant portion of our country filling our cities with smoke and fear - killing billions of animals, and some people. Totally unpredictable, hurting our economy and getting us to question the foundational bases of our lifestyle. Folks abandoning assets, thinking that they’ll be worth less next month and others seeking to profit on the misery of others. Seeking safety in hand sanitizer, face masks and bullets.
Very interesting, I wonder if we could learn something from this to help us make better socioeconomic forecasts regarding other issues and facets of our life?
3
footnote: "Whatever the regrettable human cost in death and suffering, and despite the possibly painful economic dislocations, the COVID virus has caused many hundreds of scheduled commuter jet flights to be cancelled. And in an era of climate change, that is great news for the planet."
Planet: 1. Corporate wealth: 0.
3
Trump trying to talk his way out of this is not working. Denying, deflecting, and flat out lying while people are getting sick and dying is not a recipe for keeping the economy running. Since he took office he’s been driving this economy hard with tax breaks, government spending, and low interest rates. But that won’t work now. This test needs strong government action, something conservatives cannot accept. Is this the beginning of the end of the small government movement?
8
Wow. The best of ”on one hand, but on the other hand..” economics report.
But here is rest of the news.
Despite Wuhan basically shutting down China - it has reported that it's exports fell by only 17% or something in Jan and Feb.
While in the Wuhan province alone, just the vehicle sales nose rived by 90% - almost a total shutdown.
To me, it shows that Chinese economy is quite resilient in face of this Wuhan virus.
And I suspect as open a society as we are - and much advanced than China - and innovative - this Wuhan virus stuff - to paraphrase Mark Twain's - ”slightly way way over exaggerated.”
2
Coronavirus recession=Trump Slump. How could he not be prepared? How could his administration not have a plan in waiting for such an eventually? Because he was always woefully ill prepared to be President of the Elks Lodge much less POTUS. Anyone who could even begin to handle this had fled this administration long ago. Best case scenario: he doesn't kill us all. And Pence sneezes on him after being put on the front line.
8
Why isn’t there more discussion about Far Ultra. Violet light as a method of control?
1
I’m supremely confident that our President, with a history of 6 bankruptcies, is the right person to be calling the shots to lead our country through this looming economic crisis!
He’ll invoke his usual strategy. Let everyone else get hurt or go under economically as long as he (and his) come out okay!! Trump under pressure, as always, will show himself to be a “class act”! ( uh...that’s tongue in cheek of course)
11
Lest we forget, the media is spinning the story to create as much panic as possible, in cahoots with the Democrats as always. Recently I read an article after a chain of links that said Chinese researchers had determined that there are two strains of virus, one more serious and the other as benign as a cold. The serious one appears to be declining and the benign one growing. This would suggest a short period of trouble. It may also suggest that something bad did happen in China, which that government is covering up. No, the link was not to Fox or Breitbart.
2
Any coronavirus downturn will target in-person travel and work, leaving virtual modalities with an even greater advantage. It will accelerate the digitization of work and play.
This is a good thing because it drives us to sustainable energy consumption faster.
The writer assumes a quick onset means a quick resolution. I believe instead that interactions in general get more risky and toxic, and those who create safe spaces, economic and otherwise, by digitally factoring work and life, will start to create the new normal.
When you’re on the inside, you’ll be free from the germs of the anti-vaxxers and the bullying and confusion of trolls and toxic bosses.
1
Do you really believe the statistics provided by Trump’s incompetent loyalists? I see homeless, foreclosures and empty stores.
7
Trump and Larry Kudlow, his economic advisor and telling people with coronavirus to stay at work .
5
“I like this stuff. I really get it,” Trump boasted to reporters during a tour of the Centers for Disease Control and Prevention in Atlanta, where he met with actual doctors and scientists who are feverishly scrambling to contain and combat the deadly illness. Citing a “great, super-genius uncle” who taught at MIT, Trump professed that it must run in the family genes.
“People are really surprised I understand this stuff,” he said. “Every one of these doctors said, ‘How do you know so much about this?’ Maybe I have a natural ability.”
is it any surprise that Wall Street has finally woken up to the risk associated with this conman? They can no longer ignore the fact that the emperor has no clothes and just a funny red hat.
9
COVID19 may be a convenient scapegoat, but the coming collapse has much deeper roots.
This 'good' economy has been nothing but a thin veneer covering a house of cards that has been teetering on the edge of destruction for well over a year. There is plenty of evidence:
A half million homeless.
Millions more living in multi-generational households.
And millions more working multiple jobs to make ends meet.
Meanwhile, unprecedented deficits, artificially low interest rates and an incompetent, shortsighted President with a history of failure and bankruptcy at the helm.
Finally, the biggest busts typically follow the biggest booms.
11
As we all know, it’s the sudden stop that gets you, not the fall.
5
If one believes that the sudden economic downturn may also lead to a speedy recovery because of the strengths of the fundamentals, one may forget the intervening variable that the public’s attitudes may substantially change in the interim period. People’s will reassess the fragility of life and ask hard questions about an economy that makes pandemics and a looming climate catastrophe external or exagenous events. They may ask questions about the viability of basic international financial institutions.
It is in these times of financial and economic crises—there were about 40 of them in the last 400 years—that we have to question the viability of the unjust, unsustainable, and therefore, unstable international monetary system that underlies those crises and search for an alternative.
In Verhagen 2012"The Tierra Solution: Resolving the Climate Crisis through Monetary Transformation" I have seminally presented the commercial, intellectual, ethical, ecological and strategic dimensions of a carbon-based international monetary system(www.timun.net) that is able to deal sytemically with the looming climate catastrophe and also the corvid-19. This Tierra Monetary System (TMS) includes a financial system that shifts from a debt-based to a credit-based money creation system. Its ample financial resources would be democratically directed, and not by privately owned banking systems. It would be a financial system where, in president Lincoln’s words, money is not master but servant.
3
There is no reason to believe there will be any rush to get accurate testing for the Corona Virus in the United States. The fewer cases confirmed the better the statistics for this Administration. The dead will be lumped with flu deaths, and/or the huge but unknown number of untested rape kits. When it's all over and Trump's warm weather cure comes we will have the lowest incidence of Corona virus fatalities in the civilized world. We are already the largest nation in the world where climate change will be moderate, and gun violence can be satisfactorily treated with thoughts and prayers.
7
Exactly. Get ready for the aftershocks! I am up at 4:30 AM wondering if I should go into Seattle to see a play by August Wilson and meet at Ivars for a small birthday dinner. I read extensively that there is a shortage of tests, but that by God, if you are pinned as Covid-19 exposed, you have to sit in an isolated room for 14 days without even petting your dog. My conclusion: what a joke (which is what a self quarantined woman in Seattle said). What a joke! But! The lesson to learn is that the incompetence will be compensated for with draconian responses. So beware! Don't walk into a trap where the poorly prepared become the righteous, exact a pound of flesh from you, and think they are doing you a favor. The markets will rebound with ferocious speed for the affluent, but for those with no health insurance and an overabundant trust and belief in their government, a steep bill could devastate.
4
In this article, Neil Irwin refers to “the strength of the economy” and “no huge imbalances.” I understand why he says that, so my point is not to argue with him. Rather, it is to show how our ways of evaluating and speaking about the economy are inherently biased.
For one thing, how can we speak of “no imbalances” when income inequality has been rising so dramatically?
When so much money competes to buy equities, thereby increasing the value of stocks beyond historical P/E ratios, instead of being channeled into infrastructure investments that would benefit future growth? With inflated valuations comes an increased risk of volatility, which we are seeing right now. And the possibility of a cycle of panic, which could contribute to creating a recession.
How can we speak of strength when lack of adequate medical coverage could endanger so many poor people in an epidemic, thereby endangering all of society?
These arguments are not meant in terms of what is morally desirable, just in terms of rethinking what it is that constitutes a true measure of the strength of the economy.
5
People, fueled by the media, are in hysterical panic disconnected from reality.
The real mortality rate of the virus is very low, likely well below 1%. The best data we have is from the Diamond Princess with one death of 700 mostly elderly patients. I suggest people read an article on Slate analyzing the numbers:
https://slate.com/technology/2020/03/coronavirus-mortality-rate-lower-than-we-think.html
For about 80% of those infected this is a non-event to a bad cold.
The hysteria is far more dangerous than the disease.
1
The Big Bubble is about to burst and The Bankers, Wall Street and Hedge Funds are going to blame Covid 19!
The Greed and Playing loose with the numbers have caught up with the Greed Gang, so they’ll be begging for a bailout.
The Media is playing the game constantly talking Pandemic when the facts don’t support such Hysteria.
1
Wall street and the trumpster say "buy the dip." They wouldn't mislead would they (based on their reputations for honor, trust and ethics).
3
Whiplash. At the very least we’ll all get whiplash.
Since there is no similar shock to fall back on for clues to advice, then it seems to me we should focus on coping methods that help us relax and keep us from knee-jerk reactions, that we might regret later.
I am neither a financial adviser nor an economist. But I did do one thing.
I considered the fact that both my primary and secondary inheritors might also succumb to the virus, as might I. At 75 I’m healthy, but should I get the virus I could potentially die. Those who would inherit are both 50, also healthy.
Nevertheless I decided to do the prudent thing. Which required me writing a letter, as Vanguard only provides place on forms for primary and secondary beneficiaries.
So now, in case we case we all should die, I’ve designated an international charity as a tertiary recipient.
I do have a very small percent in cash in my retirement account, enough to provide for this year’s RMD and a bit more I can invest if I choose to do that at some point.
But in the face of mortality, I feel pretty good knowing where the money would go, should none of survive the virus.
7
You would have to go back to the post-Civil War Era (but before 1900) to find equivalent supply shock examples. Those shocks were often the result or war or bad weather.
4
Sorry it is not a Coronavirus recession. It is a Republican Recession. Three years ago they chose to push for tax cuts instead of a health care policy. That has results today. They pushed to cut the CDC's budget. That has results. The collapse of higher education through "for profit" tuition looting has resulted in huge student loan debt hobbling growth. Their scatterbrained "states rights" approach to crisis management is responsible for the breakdown the economy will face. Lastly their ballooning of the national debt to pump up the stock market resulted in a catastrophic parabolic "pump and dump" spike which has collapsed the system. This isn't Obama's fault or the next President's fault. It is a direct consequence of lack of coherent broad interest political leadership. The corona virus just stumbled in at the top, but the building was thrown up hastily, created huge profits, and ignored code and the people living in it.
18
@Marty Milner And, of course, Trump botching the response to the Coronavirus .
5
Lots of articles, as here, refer to a strong economy but I ask by what measure is it strong? I get the impression is that the measure is how well off the rich will be even if a disaster happens. With Covid-19 spreading the economy may stay fairly strong but be disastrous for millions of ordinary Americans.
9
There is not such a thing as a short-lived recession. Businesses may bounce back but jobless people losing their homes or getting evicted will not recuperate that fast.
Additionally, if production is affected, we will be facing shortages, including food and medicines. So I respectably disagree. I can start a car much sooner after a sudden break when speeding.
On top of it, our president keeps lying about the virus and is unable to even produce the test kits needed. He does not have the time. He is just campaigning and creating conspiracy theories against his opponents. I wish the president would put all that energy tackling the coronavirus but I do not know if it would make a difference. A useless president would be better than this damaging one.
15
Prinz Valdemar. In the 1920's, American culture produced an unprecedented speculative land boom in Florida. The state's underdeveloped infrastructure was inundated with new residents seeking either a place to live or speculative wealth. Population quadrupled. Whole cities were raised from former swampland. The rail infrastructure was so overloaded that rail companies refused shipments of construction materials, and would only carry fuel and food. The boom was sustained with maritime traffic. Just as it reached its peak in early 1926, an obsolete sailing vessel, the Prinz Valdemar, sank in the Miami ship channel, literally corking the port of Miami. And coincidentally, putting the cork in the Florida land boom. During the two months that it took to clear the ship channel, the fragile speculative boom unwound, creating a minor economic disaster that flowed seamlessly into the Great Depression.
9
From a certain angle, all this goes to show that the state of the economy is at basis an assemblage of mass hallucinations. When a large group of inter-influencing people believe that everything is looking up, the economy gets strong. When a large group of inter-influencing people believe that problems are ahead, the economy gets weak. Both effects happen together. Both effects are erratically connected to actual occurrences. Which idea predominates depends on which gets more attention. COVID-19 is just some more food for thought; the economic effects are all in how we digest it.
5
The Keynesian solution of government spending its way to prosperity is not going to work either. Both the Monetarist and the Keynesian solutions need one key point to work. How much of the underlying wealth escaped from the effect of the bursting bubble. The recovery from the 2000 dotcom bubble was relatively quick, because there was still a lot of underlying wealth that could be coaxed back into the market after investors burnt their fingers. The recovery from the 2008 crash was slower because more of the underlying wealth had been destroyed, the remaining investors were all risk averse so the Fed had to take extraordinary measures such as QE to push them back into the market. With QE, the Fed occupied all the low risk, low reward areas so the investor had no choice eventually but reluctantly to move to the High Risk, High Reward area which is euphemistically called reviving the animal spirits. The Keynesian solution also depends on somehow deploying the remaining wealth in the society. In the Keynesian solution, the government spends the remaining wealth through deficit spending because investors are too scared to spend or invest. My own assessment is that so much of the underlying wealth has been destroyed in inflating the latest bubble, both Keynesianism and Monetarism will fail. When a bubble is inflating, the markets destroy wealth on the way up, the crash just exposes how much damage the bubble did.
5
Totally puzzled by this article. Though it quotes some stats, such an employment indicators, Mr. Irwin fails to discuss the single most important barometer of economic health, which is short and long term interest rates inversions.
As Mr. Irwin certainly knows, short interest rates went up just as long term interest rates dived --PRIOR to Covid19. This is pointing (and has never missed) to a recession in the horizon.
This inversion, and slackened demand, already indicated a weakening economy amidst a stock market inflated by artificially low interest rates and buoyed by deficit spending of enormous proportions never seen in peacetime (driven mostly for electoral and partisan benefit of the ruling party).
A recession was certainly in the cards even w/o the virus. A major recession is now clearly in the horizon --and Mr. Irwin assumes again a 2-4 month or so effect of Covid19. That is widely over-optimistic. A 12-24 month scenario of adjustments and hospitalization and excess deaths for 1-2 years is more likely.
10
@Yoandel Agreed. I was positioning for a recession before the Covid 19 virus got out of hand, simply on the basis of the 3 month to 10 year inversion and the observation that any liquidity injections by the FRB would end by April. The effect of the virus most likely has been to merely accelerate the timing of a recession. Still, we might get a nice dead cat bounce if the Chinese and US economies quickly shrug off supply chain disruptions and if the immediate drop in consumer spending turns out to be short lived.
2
I have recently talked with my son and daughter. They are both in the 50's and employed by large, multinational companies that focus on strong science and technology. Both are well educated.
Last week my son said a large group of tech employed workers at his company were laid off. And he said more layoffs are coming. He is still safe with an excellent employment review, but still worries he could be laid off.
My daughter's company was just taken over by a a large European science based company. She is head of a research team, and all of her team is being laid off. She has worked hard to get them the best "golden parachute" deal possible . She got herself the deal and is focusing on some personal experiments that she hopes will provide her with income.
Meanwhile her husband, also employed by an international company, worries about his job during constant layoffs. So far he has survived.
Some people may be gaining jobs, but at least in these major companies, highly educated and hardworking people are loosing their jobs.
14
It is difficult to tend the garden in a storm but sometimes you must cut back to make plants stronger later on. The gardener of many years will follow the seasons and know what to do with patience. He or she will subsist on what has been stored securely until the new growth provides again.
7
“Being There” maybe?
3
I have to say I'm a bit underwhelmed by the physical impact of Covid-19. The number of infections and deaths it has caused so far pale in comparison to those of the annual flu. Based on what we know, the elderly with underlying health issues are the the only ones at risk of serious consequences. Ironically, the same subset at most risk with the annual flu we have dealt with forever.
Once a name was coined, Covid-19 became the Boogeyman. Will it prove to be any more real than those portrayed in horror movies? Perhaps, but based upon what we are seeing that seems unlikely. I suspect that in a few weeks people will return to normalcy and the Boogeyman will be resigned back to movie theaters.
3
@tim k One good thing about the flu is you can be tested for it, so you know to stay home and not spread it.
Also, there is a vaccine for it. Most people I know get their annual flu shot so they never come down with hit.
Neither is true about the coronavirus.
11
@Suzabella
"Also, there is a vaccine for it. Most people I know get their annual flu shot so they never come down with hit".
At best flu shots are 40% effective because no one knows what strain will show up. In that regard they're better than a placebo but hardly immunity for the other 60%.
7
@tim k I agree. Since one year ago, many people around me have died of cancer, stroke, and alzheimer. I see a painful epidemic of cancer, stroke and alzheimer going on, with hardly any public concern or urgency. While everyone is gossiping about coronavirus, the house is burning down.
2
Among the real consequences on human health and the economy, don’t neglect the psychological. People (and businesses) tend to hunker down and become more conservative in times of uncertainty. Currently, I see conferences and meetings being cancelled into the summer. The same with both personal and business travel. Some workplaces are requesting that people that visit level 3 health advisory countries self-quarantine for two weeks. Currently, this is relatively limited, but could change at any point. We really don’t know much about the extent of spread of the disease due to lack of testing. It’s a developing situation that is unable to be accurately predicted. I think that the psychological impact and the recovery from it may take longer than expected.
9
How badly our economy will be hit and how quickly it will recover will both depend primarily on the course of the pandemic -- not on economic factors. It's currently projected that we'll have a vaccine in 12 to 18 months. Until then, our economy is going to limp at best: demand down for reasons rate cuts cannot cure, supply chains broken, workers working from home if at all, costs up, revenues down. We appear to be in for a year or more of real economic misery. The markets have not yet internalized this. Look for the markets to fall a lot further over the next six months as the vise tightens.
7
Let us hope that we conquer the virus so it cannot return with a vengeance after the summer enabling Trump to postpone the election for national security reasons.
However, a law should be passed that he can only do that on condition that he relinquishes his Presidential rights and takes part in a collective government until there is an election.
5
This article makes absolutely no sense. A recession is a recession, and the prior health of the economy has NOTHING to do with how severe the recession will be or how long it will take to recover. A recession by definition is 2 consecutive quarters of negative GDP growth. Once that's happened, all bets are off on how long it will take to recover, especially since consumer confidence will already be in the tank.
10
It’s not so much the state of the economy it’s the state of the system.
The differences between ourselves and the modern countries will be painfully apparent with this contagion and our national shortcomings will all be greatly magnified.
Upgrading our government should be our first concern. When better ways exist and have proven themselves (such as the Nordic Model) we endanger ourselves, our children and our planet by remaining in n our feudal economy.
8
@Scandiphile I agree with you that a Nordic approach to governance would be far preferable but we are moving in the opposite direction with greater and greater divisiveness and polarization.
4
Missing data alert: Non housing consumer debt is at an all time high and totals $4,200,000,000,000. bubble?
10
When good times get interrupted by a freak of nature and there's no blame to be passed around.
Just band together and get through it.
And consider that when everyone is running away from Wall Street at full speed, history shows that it's time to buy.
1
"there are no huge imbalances that the United States needs to work through to get to the other side"
Except maybe QE4ever (AKA not QE), the continuing repo crisis, the "everything bubble", income inequality, and monstrous levels of debt.
16
@Robert Selover Agree. The economy is feeding off the current asset bubbles in stocks, bonds, and real estate; which have been fueled by the ridiculous amount of Monopoly money printed by the Fed. The cost of this spending spree will come home to roost!
3
The SXSW event in Austin was just cancelled. So, no one to buy T-shirts and food, spend money at bars and hotels. Now multiply this by hundreds of events across the country: ball games, festivals, concerts. The hit to the economy will be enormous. Frankly, the only companies that will benefit from this will be streaming services.
And I don’t think you can discount the impact of fear on spending choices. Upgrade those kitchen counters? Buy a new car? Maybe not, when there’s so much overall angst about the economic impact of the virus. If enough people pull back on spending, our consumption based economy is very vulnerable.
25
Just was turned away from my favorite greasy spoon. The line was snaking out the door with more the enough people willing to spend their money.
The American economy is built on optimism and innovation. If you have a stake in the economy you have every reason to be optimistic. However, we need to reverse the interest rate cut as soon as the panic has subsided. Zero interest rates will turn banks into zombies.
4
Your diet will kill you sooner, if you continue eating at "greasy spoons".
1
If the economy is so strong, why has the US taxpayer been propping up the Bank Repo market since September even as the "market" makes new, historic highs? I imagine we are only a few weeks away from the Banks asking for another bail out. Does anyone think our political leadership will not fail to deliver whatever is demanded?
15
The one fact that can't be denied is that the Covid-19 virus has shown the United States how vulnerable we really are - because we no longer make anything!
The raw materials for products, medicine, vaccines and more are no longer produced in our country in sufficient quantity to meet the basic requirements of our citizens!
As this pandemic continues, there will be shortages of basic medicines like antibiotics, heart medication, vaccines and raw materials for consumer products all because of the short-sighted views of CEO's and elected leaders!
The Covid-19 virus outbreak should serve as a wake up call to those who think free trade works... because in an emergency, our country can't even make the test kits our medical professionals need. We can't even make a vaccine in our country because most of that capacity has been outsourced overseas!
With the exception of rubber floor mats for our cars, what can our country make during an emergency?
29
Our economy is based on consumer spending. The virus may be dangerous for this type of economy. We have two very divergent types of situations in our economy. We have those that are well situated for life's ups and downs and we have a larger portion that are not. These people live from paycheck to paycheck, have very little savings and may not have decent health insurance or may not have it at all. This makes it difficult to contain a virus and a healthy economy when consumerism become non essential.
21
@Bella No health insurance, no paid sick time, no vacation time, and no money.
And the homeless can't self isolate.
2
We can now clearly see how Globally connected and interdependent we are. The protectionism, isolationism, and general discount-ism that is so common on this big island of the US has now been disproved. Cutting ourselves off from global relationships or not realizing widespread impact of individual actions is simply ineffective and impossible.
Hopefully this new evidence will help us look at the globe as our home to take care of, not only our little back yard.
18
@kcurran My fear is that a certain segment of this country will have the exact opposite reaction and want to further recede into isolationism.
5
@kcurran
"The protectionism, isolationism, and general discount-ism that is so common on this big island of the US has now been disproved. "
First, and foremost, we haven't "cut ourselves off" from anything. Anywhere. We've only recalibrated trade agreements, sought to end pointless wars, and caused our allies to start paying for their own defense instead of picking our pockets with impunity.
And btw, the only thing we have any real control over, is our own back yard. So there's nothiong wrong with looking out for it.
While you were sleeping, globalization has caused a massive worldwide epidemic.
1
The Coronavirus will help one thing, climate change. People spend too much, consume too much and maybe this will help right the ship. I relish staying home more, enjoying what I have, not what else I need. Shopping is curtailed, maybe my spring outings will not happen after all (I will save money that way for sure). But we don't need to panic. My biggest fear is not the virus but Trump and his inability to handle a real crisis. Maybe some of his supporters will now see him for what he really is and Biden wins. We can only hope.
52
I seem to recall reading in this newspaper not so long ago that the Fed lowered interest rates because, it seemed at the time, Trump was calling for lower rates to fight against other countries with lower interest rates (such as China and parts of Europe). And Trump was insistent that there would be no problem with lowering interest rates. A number of pundits said that this was risky because if a sudden negative event were to come along, the Fed would not have the room to cut rates to support the stock market.
While the Coronavirus could not be predicted, the effect of it or something like it could be and was, but the “great and powerful wizards” in Trump’s administration forecast no such problems were on the horizon, and cutting a percent or so would not risk much. So, bowing to pressure, the Fed cut interests rates. Only now, the curtain has been pulled back and we can see that the “wizards” are really frauds, and there is no good fairy coming to show us how to get back home.
48
@ASPruyn
The Kryptonite to any grifter and his crew is a hard punch to the nose of reality.
donald, his crew, and Fox News have been creating their own reality now for so long that running up against this wall will really expose their weaknesses, which is virtually every single thing they do and that they are as human beings.
3
@ASPruyn They actually did not cut rates when the POTUS bullied them. They stopped raising rates which was a big mistake. Yep - we are left with few bullets now. Fiscal spending is going to be a must but we are already in a trillion $ deficit. Expect that to increase to $1.5T to $1.7T for the upcoming year and maybe higher.
2
@ASPruyn Something like Covid-19 was inevitable. Disease is just one way of nature's ways of thinning the herd.
We can take the easy way or the hard way. We are choosing the hard way.
1
To what extent do we have faith even in the pre-coronavirus jobs report numbers and GDP numbers?
We used to be able to count on those numbers at least being the product of honest attempts by the federal government to calculate them. Now, with Trump lying about virtually everything, and punishing any federal government official who doesn’t absolutely conform to his warped view of the world, I have to question the official government numbers on jobs and GDP before I even start worrying about the underlying state of the economy.
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@ALB
Exactly! My spouse noted that restaurants and retailers all around us are suddenly closing. Long-time, well-established ones. Empty strip malls are all around us while wealthy developers get local governments to give them taxpayer dollars to build more.
People can't afford to go to the doctor, even those with health insurance, due to high deductibles and high provider fees. People are borrowing against the rising value of their homes to pay for skyrocketing taxes, insurance and college tuition.
There is a slow-rolling, very real recession which has been going on for a couple of years while Trump lies, brags, forces his appointees to spin, and speaks of nothing but the stock market as a measure of Americans' economic health.
2
@ALB I have had the same exact thought. We see what he did at Justice and how that is now a unit that basically works for him. The BLS would be a much easier dog to tame.
1
@ALB
Good to see someone else sees this as the Little donald that cried wolf.
So confusing how people will idolize a reality tv personality with an obvious trait that they wouldn't even associate with in real life.
He's attempted to appeal to it all: hard core Jesus freaks, extreme bigots, haters of government, haters of the press, and now promoting the hatred of Democrats. I'm beginning to feel like I'm waiting in line for an interview at the set of "Blazing Saddles" to pillage Rock Ridge.
1
Who can guarantee this virus outbreak will be short lived or not return early next winter. It appears this virus is with us forever and we need a vaccine which could be 18 month wait.
16
@Robert John
And when they crank out the vaccine maybe they can do something about the common cold?
Seems it's been more than a year or so on that cure?
2
While some statistics, such as the low unemployment rate, are trotted out to assert that the economy is strong, the reality for many Americans is not so bright. In today's NY Times, there is an article about the NY City Public Schools, which have 1.1 million students, over 750,000 of them poor! Many people have jobs with no benefits, no sick time. Many families are one illness or accident away from bankruptcy, due to lack of decent health insurance and access to affordable health care. The point of the article is relevant, and I don't disagree with how the current crisis might impact us. But please keep the President's false narrative about the "great" economy out of it. Growth globally and domestically was declining before the Coronavirus, and projections for this year have been revised downward. Our economy is not great; very high levels of income and wealth inequality result in a very uneven life experience in the country. The economy is good, compared with 3rd world countries, for many Americans, though not much better for NY City residents and poor people throughout the country.
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@Michael The last truly "great" economy was under Clinton. The GDP growth and job numbers today would have been considered very low in his era. Not that he was 100% responsible but his tax act of 93 set the country on the right course fiscally. 350 to 400K jobs per month with 4% GDP was the norm.
7
@Michael
There will always be economic inequality in a capitalist system. PS Children of poor families can receive CHIP.
1
@Michael Agree, and those ever rising S&P and DOW indices were based on fluff and future fluff. With no solid there/there the floor drops out...happy landings!
2
The trillion dollar question here is how consumers react. If they suddenly decide (irrationally) that disaster is upon us and cut back on all non-essential spending, we could have a U recession rather than a V recession.
Second, in economics and politics, like in comedy, timing is everything. It looks like the effect on the economy (which has a lag) will be felt in April, May, and June. This will affect voters' sentiment heading into the election season. I would expect the administration to try something radical, like giving every person filing an income tax return a $1,000 cash payment, to stave this off (another one-time shot of adrenaline).
9
@John Graybeard Maybe. When Bush did this he had Congress. The Dems in the House will want the checks targeted to more of the lower income people. Maybe, middle class but there is always contention on where that line is. Also, I do not think the House D's are going to be doing hand stands to help Trump in an election year.
3
@John Graybeard: Very insightful, but let's just see this administration give every person any cash at all when our national debt is the highest ever. Not a chance.
1
@John Graybeard
How quickly we forget the "deficit."
donald wishes to cut SS and Medicare for those of us who've paid in our entire lives but fly over free cash to everyone who earns a paycheck? All to justify giving billions or possibly trillions of subsidy dollars to the 18% who have blindly dumped all their loot from Reagan's "Trickle Down Economics" disaster into the Stock market and now insist it have all the characteristics of a CD?
Where have we lost the concept of "risk reward?"
Stock speculation is at the top of the Risk Pyramid and when you play in the big leagues you take your risks. Apparently not if you're rich and donald is the President.
2
People spend way too much time worrying. Low interest rates already allowed at least one family a highly profitable sale of that index fund purchased before marriage 15 years ago in order to pay for adding that granny unit... regardless what the economy does, and there's still another index fund for retirement in 20 years. Luck, good planning, or a little of both? Who is harmed by that? Certainly not the contractor and his employees. Thanks, Vanguard!
4
It is not just about spending or not, it is also about thinking of existence and behaviour changes. Thoughts and associated emotions are changing to the core of what is being.
So many questions to ask such as why do I need this or that if at all? what is really important to me? what are the associatef risks?
What do I already have and do I really need more? Buying and consuming almost everything, what does it really serves?
Suddenly I am focusing on the important, essential to me and my family.
26
The company that your grandparents invested in two weeks ago, because it was a sound company selling at a fair price, has not changed. It can't contract the virus, although it may be temporarily effected by the changes in human activity associated with a pandemic. The pandemic will end and sound companies will recover. Unfortunately, the casino known as Wall Street, is a betting parlor, full of day and techno robot traders. They are not investors and large and unreasonable daily swings in the market are the action they support. So grandma and grampa get kicked to the curb.
8
@rich
If they bought it only 2 weeks ago it was probably an already artificially bloated price and when the dust settles, its price will also settle, maybe well below what Grandma and Grandpa paid for it. Will they live long enough to recoup the loss? Time will tell (as it always does).
5
@Jonathan Smoots
We don't need time to tell us that day traders don't really care whether the price is bloated, or a bargain, and all that matters is to them is the swing. The dust will not settle in a day.
1
This economy will be a strong as this author claims when those having all those new jobs have a long-term job security and are not working paycheck to paycheck. I simply do not believe that the statistics reflect with any accuracy the quality of life in this social-Darwinist country of ours.
While a virus-driven in the recession may well be short and sharp, The author’s other claims do not reflect the injustices and fragility of an economy tilted toward the very rich.
Outside the academic bubble I live in and the journalistic bubble the author lives in, there are many people working two or three jobs. They may be uninsured and are certainly underinsured. These people can be laid off at the whim of a company, and they have nothing to fall back on.
I know some of them, folks with a bachelors degree or without a college degree at all. Does the author?
42
These are the lessons I learned in previous downturns and are being reinforced now: Save, don’t go into debt. Necessities always take priority over luxuries. I’m not rich, so don’t act like I am or those who are. And economies, no matter how strong the signposts, often don’t trickle down in personally significant ways.
Add to that now: Anything can happen, suddenly and beyond anyone’s expectation or
control, with serious results, even death when healthcare is a commodity linked directly to wealth.
Wall Street may recover. I may not.
55
@Alan, "Wall Street may recover. I may not." - With all due respect, that seems unnecessarily gloomy.
The economy of most Americans is not healthy. Trickle down economic practices of the last 40 years has weakened the vast majority of Family Trees which are thirsty for the GOP imposed drought to end. From the young saplings struggling with the winds of college debt and a fickle job market, to mature trees wounded at their roots by changes in work and costs of survival, to the ancient ones hobbled by the pests and blight of health care, all struggle with that drought. The various species are weakened and in a sad state. A cursory walk or short conversation reveals the real state of America's Family Trees. Our "experts and leaders" cannot and will not see the trees for the forest, and have no idea of the true suffering in our economy. If it is not seen nor heard, those "experts and leaders" can easily say "there are no huge imbalances" and from a distance seeing that in some places, some trees and woods are thriving, then all is well.
49
I couldn't disagree with you more. The underlying strength of the economy was a temporary illusion created by extremely cheap credit, and large government deficits Really think about this Neil, don't just parrot what the club of standard economists say ("there has never been a national decline in house prices" and "the problems should stay confined to subprime mortgages and we can avoid a recession"). Here are some facts. Credit spreads were never tighter, yet the number of BBB companies grew and grew. Rates were obscenely low even a year ago. We were running a 5% of GDP budget deficit and yet getting growth of 2%. The Fed was never able to really end QE. This patient was 300 lbs, ate two meals a day at McDonald's and it wasn't salad. He tried to go for a run and had a heart attack. The fact that the doctor was incompetent in not being able to see the cardio risk in the patient doesn't mean a quick recovery for the patient. It means that the patient needs to change his diet, start exercising and fire his doctor. Our central bank, to continue the metaphor, understands the economy as well as medical doctors understood the human body in 1800, 1850 at best. Only behavioral economists understand anything about real people and they don't control interest and money. The Fed should at some point be replaced by AI, but until then I don't expect much from them except for "bleeding the patient didn't work? Well we just didn't extract enough blood then!".
75
The "underlying strength of the economy" is a trillion-dollar budget deficit and near 0% interest rates, unprecedented in our history at a time of full employment.
Just look to the cancellation of SXSW in Austin as a harbinger of things to come between now and the end of May.
110
The so called underlying strength of the economy is an overstatement, most economists see underlying weakness in the pre-virus economy; declining GDP, declining business investment, and excessive debt.
So this is all a shock to an economy that was already slowing and heading towards a recession.
87
If the world ending virus was a real threat, the markets would be down much more. The most likely outcome is significant spread of virus, most people will get over it, the virus will fizzle out by late April and the news cycle will move to Presidential elections. The easy money will keep flowing, the easiest way to deal with deficits is inflate your way out of it.
10
@starman Easy money runs counter to inflation. There will be no wage pressure based inflation ever again.
3
@starman
You sound like that extraordinarily successful businessman Donald Trump.
3
@starman:
"If the world ending virus was a real threat, the markets would be down much more."
Watch what happens the Asian stock markets when they open Sunday night local time.
Watch the European stock markets when they open Monday morning (it'll still be Sunday night in SF).
Watch Wall Street when it opens on Monday morning — just remember to set your clock to wake up before 6:30am PDT.
"Down much more" is not altogether out of the question... a huge wave of selling in Asia is likely to trigger a huge wave of selling in Europe, which in turn is likely to trigger a huge wave of selling in New York.
Just like what happened at the end of this just-past week.
Contagion — it's not just disease-causing viruses & bacteria, you know.
4
I don't want to burst anyone's bubble, but we're already in the coronavirus recession.
It's hard to spend money if you're worried about catching a virus at the store. It's hard to go to work if you're worried about catching the virus from others.
Not spending money should be more of an art than spending it.
70
@Pamela L. I think we’re still in the “run out and buy random stuff you might need but probably won’t” phase. Looking for news articles on the craziest things stores are sold out of, just like I used to see for hurricane prep.
1
There is no underlying strength in the economy, it is just a bubble. With QE and Zero percentage interest rates, the Fed pushed investors out of safe assets further and further out on the limb into riskier and riskier securities in the hunt for yield. Junk rated companies, Sovereign' who have a long history of default such as Greece or Argentina, or profitless unicorns have had no trouble raising funds. Investors were still dancing because they though Fed had backstopped the market when the Coronavirus stopped the music. Now there is a rush to dump all these iffy securities and run to safety. Just like in 2000 and 2008, the true value of these iffy securities will be revealed in a frozen market with no buyers. There will be no quick recovery because the Fed can only work when there are investors in safe securities who can be pushed into riskier assets. When everybody is fully invested in speculative assets and on the path to losing everything, the Fed will becomes powerless as in early 30s, or the BOJ in the 90's. The Fed can only print money, which is a claim on underlying wealth. The Fed cannot print wealth. When the underlying wealth disappears, poof, into thin air, creating more claims is like pushing on a string.
88
@Rahul
Further more there are all kinds of laws and absence of laws that give the wealthy several legs up. Bill Clinton who unleashed Wall Street also got rid of the luxury tax of 10% on the various toys of the wealthy - e.g. 40 million on a 400 million Leonardo sold at auction -- straight to the Treasury - - how many Joe Blow's income taxes does it take to equal 40 million ?? (economists don't seem to get this) -- # how to close the budget deficit and purchases like private jets end up in a tax privileged category. (probably many more I don't know about. I am one of Obama's stupid art historians -- not a genius lawyer.) Second, there are all kinds of hidden taxes (equal for all esp the little people who have to pay them). My 354$ airplane ticket included 254$ in Taxes and fees. Gasoline is heavily taxed. And we have taxes on lots of other stuff. Eating out in Europe is a pleasure-- the price is what you pay not 25% or 39% more for tax and a tip.
The rich definitely need to pay more in taxes v-- and IMO money for charitable donations should go untaxed (a means of self promotion?) People must be encouraged to exercise their consciences and do the right thing even if there is a slight cost to themselves. I saw a young woman spend 6$ at Wendy's on a meal for the homeless man at the door! (True charity!)
I think God is a great idea... existing or not.... but only if we can be encouraged to be decent to our fellow man and also to ourselves.
1
Considering that consumer spending is keeping this economy afloat, we'll see what consumers end up doing which will dictate or fortunes (no pun intended).
22
Multipliers. Multipliers. Multipliers. Get your multipliers here.
A sudden stop usually precedes a crash. With a 14-18 month minimum on pharmaceutical intervention, you can reasonably expect you're going to hit something. Slamming on the breaks won't help when you don't have enough distance between yourself and the tree. You might get whiplash first but the car is still totaled. We're mostly wondering who survives or not.
The global economy is basically praying the tree turns out to be a bush. It might actually be a gigantic iceberg. We're not sure yet.
73
I agree re the tremendous shock if the virus situation continues to great worse over the long term.
Hopefully, history has proven these things like SARS, MERS are quick, one shot shocks.
However I disagree how Neil blithely overlooks the house of cards economy based on an insane trade war, record corporate, student, consumer, national debt.
He sounds like Longshot Larry Kudlow, Trump's toady economic cheerleader not mentioning any of the danger signs so obvious as history has taught us above.
135
@Paul you forgot something obvious. SARS, MERS, "quick one shot shocks" that were followed by coronavirus. What we are going to be seeing is a series of "one-shot shocks." We live in a world of lots of people traveling in boats and planes, shoved together with whatever disease they have, and viruses mutate fast. Coronavirus will be followed by something else as disruptive or maybe more so, and then followed by something else. We're going to be passing around the SARS, MARS and coronaviruses of the future over and over again. It's inevitable. We're going to get waves of "one-shot shocks." We need to be better prepared than we have been on this one.
33
@Paul The 1918 Spanish Flu wasn't so quick or so nice as those recent flare ups... causalities in the millions.
3
@Brookhawk thank your for your reply. I half agree with you. Yes we alway have to be prepared for emergencies especially when we have an ego maniac incompetent demagogue in charge of the country which makes it ten times harder.
However, the roof is not caving in, Yes we will have future medical emergencies but modern science, history, common sense etc. make us better prepared for them.
As FDR said, the only thing you have to fear is fear itself.
That should be blasting over the airwaves every day in this crisis.
1
" ... no huge imbalances that the United States needs to work through to get to the other side, equivalent to the stock market bubble of 2000 ... "
Oh, really? There are more than a few serious people who have been muttering for some time about bloated valuations, poor earnings quality ... you name it. And the propensity of American managers to respond to stock price downturns in the least productive ways does not encourage this investor.
72
@Steve Completely agree. The general public has been ignoring this because they've been distracted by the clown show in Washington. In stocks it was similar to 2000 in many ways and in corporate debt very much like 2008. At the same time. Let's take Eric Rosengren's " brilliant" idea to its logical conclusion: investors sell all risky assets to the Fed and hold cash. What do they do next with their cash? I'll tell you what I'd be buying at that point: gold, silver and any currency where the central bank isn't doing what the Fed would be doing. Bye bye dollar as world currency.
1
One cure for recessions is increased government spending (see Keynes). Alas, Trump has done what every GOP President has done since 1980....blow a gaping hole in the deficit with tax cuts for the rich that never ever pay for themselves.
Trump inherited a strong economy from Obama. That was the time to raise taxes (like Clinton did) to shrink the deficit, in Clinton's case to less than zero....and the economy did just fine. Then Bush the Lesser did what Republicans always do and boom!
Now with interest rates approaching zero and the highest deficits ever, if a recession hits all we will have to fight it will be Trump's Twitter feed.
Good job, Trump voters.
313
@Nathan Hansard
And, 'it's like' W gave Barack a garbage-filled dumpster for an economy, and Barack gave the donald a fully-stocked 'economic warehouse' -- and left a WH fridge full of ice cream for the new guy.
Then, as spoiled and ignorant children who won't eat their vegetables will, the donald just screamed and screamed for more ice cream -- and for all congratulations for low unemployment #s ... in particular, and for the 'good' and still- growing economy … in general.
5
The Trump administration squandered the ammunition the government has available to ease a recession by pressuring the Federal Reserve for interest rate cuts even though the economy was humming along nicely, and putting through a massive tax cut that gave the economy a short term boost that Trump could brag about. I think the American people will have a visceral reaction to any plan to bail out large corporations hurt by the current coronavirus slow down, or to save bankers from their foolish business loans. When ordinary Americans in hourly positions have to stay home for 2 weeks without sick leave they lose 100% of their incomes. Corporations, the stock holders who own them, and the executives who are paid lavish sums to keep stock prices high can much better afford the economic hit.
94
@green mountains
"putting through a massive tax cut that gave the economy a short term boost that Trump could brag about"
Even the short term boost was limited, because most of the tax cut for corporations was used to buy back their own stock, inflating the stock price, but not investing in the economy for the short or long term. The tax cut was not needed; it would have been much better for the economy if the money had been used to repair and rebuild our country's infrastructure, rather than given to corporations and the top 1%, who did not need it.
41
As corona virus moves into 60+ countries, it will now be endemic in the human population until a vaccine is found and mass global vaccination program starts. Otherwise, there will be continued reintroduction of the virus to the USA from countries who are unable to fight it.
52
You seem to imply that the US is more able to fight this virus than most other countries. From what I've seen so far, we'll be the ones contaminating the rest of the world if we continue down the path of denial led by our fearless leader who, as always, is most concerned with his election in November, and nothing else.
11
@Shoshon NO country is "able to fight it" at this point. there is no vaccine and there is NO treatment, aside from supportive measures.
6
@Shoshon There will be continued reintroduction of the virus to the rest of the world from my Republican neighbors who believe Trump that this is a hoax, no worse than the flu, and their three vacations a year (summer in Europe) and business trips will continue as scheduled. Seriously. Nextdoor website bragging.
3
Why is that person in the photo wearing a mask? That is ridiculous. If he is sick, don’t travel. If not sick, get that dirty mask away from your face.
16
FYI. People with compromised immune systems may choose to wear masks for the small amount of protection they may offer. As a cancer patient undergoing chemotherapy, I have researched the effectiveness of masks extensively. I choose to wear one when I go out in public myself even though I have been mostly self quarantined since I began treatment. I for one would appreciate people who have no knowledge of my condition making judgments about my choice to do so. That would include you, sir.
1
@Michael Blazin if it keeps your fingers away from your nose and mouth, it is somewhat helpful as a preventive tool, reminding you not to touch your face, bite your nails , etc, and self innoculate with whatever is on your fingers.
1
With interest rates hovering around zero worldwide, the Fed and other central banks just don't have much ammunition for a recession.
This will particularly worse because this is a demand-side recession, driven by people not buying and not working because there are no customers.
Monetary policy is unable to cope with such recessions. As in 1932, who wants to borrow money, no matter how cheap, just to go broke?
The obvious answer is to pump money into the economy, directly to the people who can't spend because they can't work, and because they have no work, they have no money.
It's called zero-day, federally paid, sick leave. We'll need similar support for every mom-and-pop business that depends on selling to the public.
Because this goes against the grain for the GOP, instead we'll have tax giveaways to billionaires, who will respond by buying up every business they don't already own. They'll buy the stocks from 401ks people have to liquidate to have money to eat.
No economic stimulus that way, but, tough. It's good for billionaires, and that's good enough for the GOP.
190
"If there is nothing fundamentally wrong with how the economy is structured, after all, a return to the status quo should be perfectly plausible."
Ah...this is the multi-trillion dollar question. My guess is that there are some fundamentally wrong things going on with the economy, including record corporate debt levels, inflated asset markets, various national economies that were already near "stall speed," and central banks that have very little "dry powder" left. (And don't forget the leadership vacuum/insanity in the US.) I've long felt there would be an "echo crash" years after the 2008-09 crash. It would require some external trigger, which I think we've got now.
147
@Richard
I'd rather classify the 2008-09 crash as the preliminary rumbling.
Like with our knowledge of global warming or gun deaths we basically did not respond at all to the evidence of our failings that the crash presented us on a shattered platter except with further expanding debt to unbearable and insane levels globally, foolishly enough not to smartly and environmentally responsibly stimulate and strengthen the economy at large but to further enrich the yachting class to the detriment of everyone else with bailouts, tax cuts and tax evasion vehicles and corporate welfare and deregulation for them already privileged only. It's not just corporate debt. Bank, household and government debt have also continued to pile on and stink to (make any economic) high heaven (uninhabitable).
The Bank of International Settlements where all global data are collected and analyzed with meticulous rigor has explicitly warned for a renewed superhigh global crash risk because of this slow-motion-tumble-straight-into-the-debt-abyss, this time around without any functioning braking or recovery mechanisms left, in a report from the fall of 2018. I only have a link to offer as proof in German. It illustrates "how 'Michelle Wolf cry level' bad is it?" with an irresistibly clear graph visualization though and there's always the google translate catastrophe you can harass it with:
https://m.focus.de/finanzen/boerse/warnender-ausblick-auf-die-finanzmaerkte-der-crash-wird-kommen_id_9785181.html
2
if it goes from just supply problem to supply plus demand problem, exacerbated by precarious employment and inadequate health insurance, what then?
43
@Roberta Laking then we finally get a real test for our very own "stable genius" . and more people will suffer and die.
the rich won't care until it effects their supply chain of cheap corporate serf labor and luxury items. the rest of us are going to be on our own.
3
If the economy collectively has 6 months of reserve and the Covid-19 pain lasts only 4 months, then the rebound will be quick. This is the best-case scenario V-shape recovery.
If the economy collective is living paycheck to paycheck, then 4 months of Covid-19 pain can ruin a person or a business. Many lenders, landlords, and utilities do not take kindly to a 90-day delinquency. This is the worst-case scenario L-shape recession.
117
@William Fang And, most people do live "paycheck to paycheck" and - with the healthcare bills this can cause these families -- this will be a bad fall & a looooong recovery
50
If the small suppliers at the end of supply chains go out of business, it will take a long time for supply chains to recover.
33
@William Fang It will be here longer than four months. It's likely two years.
1
Neil Irwin makes no mention of very high levels of corporate debt, a significant share of which is barely above junk grade. With a sharp slow-down of the economy, some companies might start being unable to pay back their debt and start a debt crisis.
Currently markets are crossing their fingers hoping this will be a short recession which will not provoke a corporate debt crisis.
An analysis backed up with some data would be welcome.
96
@Rap Agree with you but analysis backed up by data is rare here or in any newspaper. These are stories like the ones we tell our kids to put them to sleep.
3