Will We Flunk Pandemic Economics?

[Zorro]

Our government suffers from learned helplessness.

Just a month ago Donald Trump was still insisting that Covid-19 was a trivial issue, comparing it to the “common flu.” And he dismissed economic concerns; after all, during flu season, “nothing is shut down, life & the economy go on.”

But pandemics come at you fast. Since Trump’s blithe dismissal, something like 15 million Americans have lost their jobs — the economic implosion is happening so quickly that official statistics can’t keep up.

In our last economic crisis the economy shrank around 6 percent relative to its long-run trend, and the unemployment rate rose around five percentage points. At a guess, we’re now looking at a slump three to five times that deep.

And this plunge isn’t just quantitatively off the charts; it’s qualitatively different from anything we’ve seen before. Normal recessions happen when people choose to cut spending, with the unintended consequence of destroying jobs. So far this slump mainly reflects the deliberate, necessary shutdown of activities that increase the rate of infection.

https://www.nytimes.com/2020/04/06/opinion/coronavirus-economy.html

[progree]

1. Somehow Wall Street thinks everything is peachy keen

S&P 500 futures (2728) are 18.4% above the crash's low point (2305 March 20 close)

I don't get it myself.

Update: market opened 5 minutes ago. S&P 500 at 2744, up 3.01% over yesterday's close, and 19.0% above the crash's low point.

[progree]

2. Optimism Among U.S. Small Businesses Plummets by Most Ever, Bloomberg, Apr 7

https://finance.yahoo.com/news/optimism-among-u-small-businesses-104302255.html

Sentiment among U.S. small businesses collapsed in March by the most on record and owners’ outlooks deteriorated swiftly amid the economic disruptions caused by the global health crisis.

The National Federation of Independent Business optimism index slumped 8.1 points to 96.4, the group said in a report issued Tuesday, the biggest drop in monthly surveys going back to 1986. The group’s measure of business conditions six months from now declined 17 points, the most since November 2012, to 5.

Wall Street to Main Street: "Sucks to be you, bwa ha ha ha ha. Drop dead"

[appalachiablue]

3. Years of anti government & anti democractic ideology continue:

…"Second, decades of hostility to government have left us poorly positioned to deliver even the aid Congress has voted. State unemployment offices have been underfunded for a long time, and red states have deliberately made it hard to apply for benefits. So the surge in unemployment is overwhelming the benefits system; Congress may have voted disaster relief, but the money isn’t flowing.

The loan program for small businesses is also, by all accounts, off to a shambolic start. And those $1,200 checks everyone is supposed to get? Many Americans won’t get them for weeks or months.

It doesn’t have to be like this. Canada has already set up a special web portal and phone system to provide emergency unemployment benefits. Germans have been pleasantly surprised by how quickly aid is flowing to the self-employed and small businesses.

But decades of conservative attacks on the idea that government can do anything good have left America with a unique case of learned helplessness. And this is combined with utter lack of leadership from the top..."

[chriscan64]

4. I consider myself lucky, for now

My company is a family owned printing business that laid everyone off but me. I work from home while the owners do all of the physical production. I live in Texas where getting unemployment is not impossible, but the system is set up to cut off benefits on a hair trigger. One of the requirements is that you submit a report every week of all the jobs you have applied for, minimum of 5 per week. I was denied a week of benefits for being one hour late with my last report in 2009. I was lucky then also when I found a job in the second week. I ran out of places that were hiring in my field in the first week, I was essentially cold calling in week 2.

It is not impossible to jump through all the hoops, but the sense that they really don't want to give you compensation is palpable. And the system is set up for a normal working economy, finding 5 places a week to apply to online in a shut down San Antonio is a daunting challenge. I do not know if they have adapted to the new reality, I have not heard anything.