WP: "economic decline will be sharper and more painful than during the 2008 financial crisis"

[honest.abe]

From the Washington Post..

The U.S. economy is deteriorating more quickly than was expected just days ago as extraordinary measures designed to curb the coronavirus keep 84 million Americans penned in their homes and cause the near-total shutdown of most businesses.

In a single 24-hour period, governors of three of the largest states — California, New York and Illinois — ordered residents to stay home except to buy food and medicine, while the governor of Pennsylvania ordered the closure of nonessential businesses. Across the globe, health officials are struggling to cope with the growing number of patients, with the World Health Organization noting that while it required three months to reach 100,000 cases, it took only 12 days to hit another 100,000.

The resulting economic meltdown, which is sending several million workers streaming into the unemployment line, is outpacing the federal government’s efforts to respond. As the Senate on Friday raced to complete work on a financial rescue package, the White House and key lawmakers were dramatically expanding its scope, pushing the legislation far beyond the original $1 trillion price tag.

With each day, an unprecedented stoppage gathers force as restaurants, movie theaters, sports arenas and offices close to shield themselves from the disease. Already, it is clear that the initial economic decline will be sharper and more painful than during the 2008 financial crisis.

https://www.washingtonpost.com/business/2020/03/20/us-economy-deteriorating-faster-than-anticipated-80-million-americans-forced-stay-home/

It starting to feel like the cure might be worse than the disease. Seems like we lose no matter what.

I think our leadership needs to assemble the smartest people in the country (from both sides of the isle) to figure out how best to deal with this extraordinary situation. If this isnt handled correctly we could be headed for disaster. I hope Joe Biden will take the lead on this since the Idiot in the WH is hopeless.

NOTE: This article is behind WP paywall. I was able to access using incognito mode in Chrome.

[judeling]

1. It wont be as sharp as 2008 but it will last longer.

Because this is an election year the response is much quicker and will be bigger and better thought out.
Because this is a consumer facing downturn the injection of cash will mitigate the problems better.
Because of the nature of the virus and its and the rolling nature of the infections the period of downturn will be longer.

We can look at China and see the future. While it appears that China has gotten past the peak, they are still in a massive lockdown. Schools in urban centers remain closed intensive monitoring remains, social distancing is in place even if relaxed a touch. After a massive initial shock even with government support industry is only returning to at most 80% of what it was ad their entire small business sector is I extreme distress. They have had to choke down on incoming goods and people to prevent incoming possible vectors.

This will be true across the world. Flattening the curve extends the time. Until a vaccine and herd immunity kicks in economic activity will remain depressed.

[BidenBacker]

3. Most people to this day

still don't know just how dangerously close we came to a total and complete meltdown back in 2008.

The Week America's Economy Almost Died

https://www.npr.org/templates/story/story.php?storyId=95099470

The thing that scares the shit outta me is that both Dubya and Obama had some pretty sharp financial cookies working for them who were barely able to avoid disaster.

Trump has Munchkin & Krudlow.

[judeling]

4. True, But

This is a different problem. But because the problem is based in workers and consumers it is actually more in the basic Democratic wheelhouse, A general rebuilding of the safety net will indeed be the most effective approach. Widely dispersed support as low in the scale as possible will support the demand needed.

[BidenBacker]

5. Agree support should go to those lower in the scale than the last time

I just don't know if there is enough time to properly set up what you are seeking...we'll soon need emergency responses rather than the sound longer-term proposals you have suggested.

Every financial crisis is different...this one seems to be more like a sudden heart attack or stroke compared to a more gradual but still severe illness. When Obama took office we were losing 700,000 to 800,000 jobs every month, and that was the worst recession since the Great Depression. The jobless claims in the last few days and future projections are staggering and well into the millions. 20% unemployment is a very real possibility and we might easily blow through that.

The coronavirus contraction may wind up being the worst ever seen...

Echoes of the Great Depression? U.S. economy could post biggest contraction ever

https://www.marketwatch.com/story/echoes-of-the-great-depression-us-economy-could-post-biggest-contraction-ever-2020-03-19

I just don't have the confidence in the people that Trump has in place to properly deal with it.

[judeling]

8. Actually leadership is aware

and seems to be pushing hard but not to the point of backlash.
But also this is just the next round and more will come. While immediate responses are needed the next rounds will just include more nd more of the long term.

[BidenBacker]

9. You're probably right

And without a doubt the GOP will propose yet another tax cut to pay for the resulting massive sea of red ink.

Gotta love that Laffer Curve, boy.

[BidenBacker]

6. From the article I just linked

Economists are split on when the economy will start to rebound, but hardly any share the bullish talk of the Trump White House. President Trump vowed on Thursday the economy would take off like a “rocket” once the spread of the virus is under control.

His Treasury Secretary, Steven Mnuchin, also predicted on Thursday the economy will roar back with a “gigantic” fourth quarter, saying “we are going to kill this virus” and return to a “normal world.”

This is just more bullshit happy talk...akin to Krudlow's "just keep buying on the dips, folks!"

To make matters even worse, we were already running record deficits ($1.5 trillion?) and the Fed has already slashed interest rates to damn near zero, so not sure what much else they can do...short of getting Bernanke's helicopters to start dropping freshly printed $100 bills outta the blue. Good thing gas is real cheap now...because they're gonna be flying 24/7.

[BidenBacker]

2. Brother, can you spare a dime?

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[W_HAMILTON]

7. It most likely will be. And people need to brace for this.

And, even though conventional wisdom says, "hey, once this coronavirus thing is over, everything will quickly go back to normal!" I think that is wishful thinking as well. I'm worried that we will have another slow and deliberate climb to getting back to where we were just a few short weeks ago. Many small businesses will be driven completely out of business in these next few months. They will be forced to lay off employees. Does anyone think they can just magically restart and get everything going back again, like simply pressing the resume button after a pause, just like that? I don't think how that's going to work. Even if it were in some cases, the lingering effects of OTHER companies not being able to do so will drag down the economy for even those businesses that are able to get up and running quickly, meaning that even the businesses that are able to quickly restart will probably be more hesitant in hiring and other decisions since they don't know if the market is still out there as it was before all this occurred.

I worry that we are basically looking at a similar situation to 2008, but even worse economically, with probably a slightly quicker (but small) spike once we get through it, and then yet another years-long recovery to get back to where we were.

Fuck anyone that took for granted the economy that Obama helped shape and the economy that Hillary committed to continuing and improving upon. We are all now fucked.