What Will Our Economic Recovery Look Like?

Obama's top economist: "I expect us to look like we’re on the ‘V’ trajectory, but that ‘V’ will only get us halfway."

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The economic toll of the coronavirus has been almost as staggering as the death toll, and has been the driving force behind calls for various governors to reopen their states to economic recovery. As they do, can we expect the economy to recover quickly? After all, a pandemic that forces businesses to close for the sake of public health is very different from a cyclical recession. If the recovery is as steep as the downturn, could that help Donald Trump and hurt Joe Biden in the 2020 election?

This anxiety for Democrats came to a head this earlier this week in a piece for Politico by Ryan Lizza and Daniel Lippman: “The general election scenario that Democrats are dreading.”

The article highlights a growing fear among high-ranking Democrats that—according to top Obama administration economist Jason Furman—“we are about to see the best economic data we’ve seen in the history of this country.”

Nearly 40 million Americans have filed jobless claims over the past 10 weeks as the coronavirus pandemic has unfolded, and the most recent Labor Department report pegged the unemployment rate at a staggering 14.7 percent, though even that is likely an underestimate. GDP contracted at a 4.8 percent annualized rate during the first quarter, and the nonpartisan Congressional Budget Office (CBO) expects that figure to lurch closer to 40 percent in Q2. But in terms of rates of growth, such a low starting point leaves much room for improvement in the five months between now and Election Day.

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  1. Avatar photo
    Show Jay Janney the 🚪!

    I live in flyover country. Re-opening has begun. It'll be slow, but is gaining steam. People a re tired of being at home.

    On May 20th I went to a fine Italian restaurant, no waiting. Come Saturday it was a 2 hour line at Texas roadhouse. We went elsewhere. By the end of summer, people will be back out.

    But there are a lot of businesses that missed their window. That's where the pain will be.

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  2. Chuckles the Clown

    PLease explain to me how laid off teachers is a bad thing. Schools are closed, so why do we need teachers. Also if they are laid off or furloughed maybe we can break the terrible teacher's union across the country. All cities claim they have budget shortfalls and will have to lay off cops. If you were a mayor, would the police me the first thing you would cut.

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  3. Avatar photo
    Visibly

    I will just wait and see!

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    1. Jaybrown

      As will we all, since that is all we can do, except talk.

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  4. Avatar photo
    Pat Riot

    It makes sense:

    1. The economy dipped for an external reason, and that reason will go away whenever the bug does.

    2. Companies laid off millions, and will hire some percentage of them back (but not all), so we'll have a less severe downturn after the "recovery" but it will still be a pretty bad recession. And we will also lose a lot of companies permanently as the disruption kills off the weaker ones.

    3. The stock market is going to love it initially since corporate profits will look good after the layoffs (except for certain sectors and companies of course).

    4. Longer term we will see permanent consumer and business behavior changes in some areas which again will create some severe winners and losers, and drag on the economy for a while.

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  5. Avatar photo
    Poliorcetes

    Most of the restaurants that collapsed aren't coming back any time soon. Because of the lack of leadership to eradicate covid, we are going to have constant outbreaks for the next year or more. Constant reminders of death such as today's child death from MIS in Louisiana are going to dampen any social reopening plans. On top of all the viral control expenses every business now has, plus the huge budget defecits at the state and local level from unplanned tax income loss. Until this is under control it's going to be a crippled economy.

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    1. Jaybrown

      How is it that you think "leadership" could or would have "eradicated" Covid-19? How is it that "leadership" could could prevent recurrent outbreaks without a vaccine?

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        Poliorcetes

        @lymanstoneky has some good proposals on ways you could almost eradicate covid under current conditions. But would require active federal leadership and coordination, which does not currently exist.

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      2. Avatar photo
        td12212

        "leadership" appears to have helped New Zealand, Taiwan Iceland, Norway, south Korea etc. in the absence of a vaccine.

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        1. Jaybrown

          In order to make that point, which may be true, you need to specify the "leadership" that caused or facilitated those results, and how.

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          1. Avatar photo
            td12212

            They followed all basic scientific advice, tested, contact traced and isolated individuals and launched shut downs long before we did.

            The feds in our case absolved themselves of all responsibility and told the states to find their way alone without much federal help or guidance. There has to be a national policy on these matters. It's almost as if a foreign country invades us and the feds tell the states to stop said invasion on their own.

            The feds rolled over and played dead in response to this event. That is not valid policy.

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          2. Jaybrown

            That is not specific. Are you saying the government (federal or state) ignored or rejected scientific advice?

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            Poliorcetes

            There has been little federal leadership from my experience as an ER doctor. My corporation secured PPe while the feds literally gave us broken masks. Unlike Ebola the CDC has become irrelevant, they sent out a few emails and then went quiet. There are still a number of ways to shut down covid in the USA but all require a coordinated Federal plan, and none has been proposed. Trump surrendered to Covid and the Feds just disappeared. From my experience.

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          4. Avatar photo
            td12212

            A science based approach to pandemic policy is why they were successful and we aren't. That is leadership.

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    2. Avatar photo
      Pat Riot

      Congress *really* needs to bail out the States if we want to see a v-shaped recovery (what I wrote above notwithstanding). My assumption was that they would, but if they don't we're going to see millions of laid off cops, fire fighters and teachers, and more business disruption at the local level, which all will translate to a recession that drags on.

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      1. Jaybrown

        Should lightly impacted states be required to bail out states which suffered badly in no small part because of bad leadership prior to the pandemic?

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        1. Avatar photo
          Poliorcetes

          Already happened, those trillion dollar bills were not self funding.

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