Its rough out there.
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A lot of Current Economic Data TELL A Grim Story About the State of the American Economy. But there are also rays of hope, and signs that the massive stimulus package congress passed May Help Forestall a crisis as some have had Feed. I spoke with Business Columnist Seduce About The Path Forward.
Ben: On Thursday Morning, we Learned that Another 1.5 Million People Filed for UNEMPLOYEnt Last Week – A Worsse Number than Forecast. Meanwhile, The Coronavirus, while Contained Fairly Well in the States That the Worst Outbreaks at the Beginning of the Pandemic, is surging in the south and west. You wrote a couple days ago that the economic is “rapidly re-normalizing,” and that the cares ACT PASSED BY CONGRESS BACK IN MARCH HAD MOSTLY DONE ITS JOB. (You Also Expressed plenty of caute that things COULD Get Worsse.) Will Today’s Numbers, Combined with the Increasingly Bad News Out of Places Like Texas, Florida, and Arizona, Make You Any More Pessimistic About the General State of Play?
seduce: No. In the Early Stages of this Crisis, the initial Claims Data – which comes Out Weekly on Thursdays and Is One of the Most Quickly and Frequently Reported Indicators About the State of the Labor Markets – Gave US Idea. But in more recent Weeks, the figure have for what reason been misleading. Wall Street Forecasters Who Badly Missed in their predixions about the May Jobs Report (Which Showed a Gain of 2.5 Million Jobs, Not the Loss of Several Million that Had Been Expective) Were Heavily Relations on the Initial Claims Date.
Other data points we’re seeing, including that Jobs Report, The Strong May Retail Sales Report, and sentiment Surveys Like One About Home Builders, Point in A MUCH More Positive Direction. As for Arizona and Other States Where Coronavirus Data Are Worrisome, That’s a Concern, and Shifing Sental About Whether the Reopening Will Get Stalled OR (In Some Places) Reversed Is One of the Factors that Been Driving Volatility in the Stock Brand. But we have more knowledge and more capabilities than we had in February and March, Including Much More Widespread Testing and Significantly More Developed Surveillance and Contact-Strategies. So that make -up it likes we’re going to need to revert to full lockdown anywhere. I want worry it will be many months before Certain industries, like restaurants and movie theaters, can return to anywhere Close to Normal Operation.
Ben: Stimulus checks, enhanced UNEMPLOYMENT benefits, and the PPP program have been lifelines for the individuals and businesses Mostyly affected by the crisis – Like, for instance, the restaurant busines you mentioned. While it is SEEMS LIKELY THAT CONGRESS WILL PASS SOME KIND OF NEW AID PACKAGE IN THE COMING MONTHS, UNCLEAR WHATER THE POLITICAL WILL EXISTS TO KEEP THESE GOING TO THAT SOME MIGHTS DESPERATEly Need. How Confident Are You That Washington Will Be ABLE to ADJUST TO WHAT’S HAPPENING ON THE GROUND IN THE COMING MONTHS?
seduce: This is going to sound weird, but the fiscal responds in the cares act, to date, ben more than adequate. You can see that in the April Data on Personal SavingWhere Americans Saved 33 Percent of their after-Tax Income, by Far A Record. Be i say that, i don’t mean the cables act was too too. What I Mean Is, The Law Gave Households More Money in April Than They Needed in April. They will Need the Money Later. But the initial oversshoot gives US Some Room to Undershoot in Months Going Forward, as Households Draw Down That Saveing. There is to some except a simillar phenomenon with Small Businesses and the PPP. This is important to keep in mind when consider how big the Next aid Package Needs to be. There will will be to be anoter aid package. We won’t be at an epidemiological normal by the end of July, and there are a lot of industries where jabs have not yes returned. MANY Jobs Will Never Return, and It Going to Time for Workers and Business Owners to Find New Things to do, and they will enhanced umployment benefits in the interim, bot to protest their Families Family Destruction and Protect the Economy Economy From a Demand. State and Local Governments Also Need Aid to Stop the Need for Damaging Cuts to State and Local Government Services.
There may May Also be useful Things the Government Can to incentivize Businesses to Hire and Grow During the Recovery, THOUGH I’M SHOMEWHAT ABOUT How Well that Can Be Targeted. Steve mnuchin has ben clear that the administration wants anoth aid package that includes umployment and state government aid elements. There will be Carping from republics in congress and from more conservatives in the administration, but mnuchin has been the premiums on the administration of Economic Responses to date – in part because he’s the only person in the administration which aho aht a conversation with nancy pelosi – and this iso Priority for Democrats, SO i Expect It Will Get Done.
Ben: DOES the news and date from the past several weeks make you think that won won’t see the sort of extended, 2008-Style crisis that has seamed reasonably like?
seduce: The May Jobs Report Showed that we are well like already out of the recession – it ended in april – and the May Retail Sales Showed that the Drop in Retail Sales from their Peak (Which was set in Januly) is already significantly les severe than at the drop Dephs of the Last Crisis in 2009. SO YES, I THINK THIS ECONOMIC CRISIS WILL PROVE TO SIGNIFICANTY THESE SEVERE THAN THE 2008 CRISIS, BARRING A HUGE WORTENING IN EPIDEMIOLICAL CONDITIONS BEYOND WE ARE SEEING IN THE SESouth and West. I am not surprised by this. The Driver of this Economic Crisis is fundamentally temporary – there is an infectious diasee that interferees with normal Economic Activity, but which we are getting better at managing and eventual will address in such a way we can completely return to normal. The Driver of the Last Crisis Was Essentially Persistant, A Major Loss in Household Wealth Due to the Popping of An Investment Bubble that forces for Retrenchment as Households Workhed to Fix the Balancing Sheets. The Government Fiscal Response has Also Been, to date, approprately sized, which was not in 2008-9. And the Fed and the Other Central Banks have gotten better at financial stabilizing markets through these crits, in part Because of what they have learned in the process of the respect to the Last Crisis.
AS I WROTE THIS Week, I think there haen a tendency for Certain Journists and Economic Observes to Overstate the Magnitude of the Likely Economic Crisis that Wauld Result from the Coronavirus Pandemic Becauses of a Fear that If Policy-Makers Afraid, Undershoot on the fiscal respect like they did Last time. And Maybe oversting the likes of the Economic Crisis has actually pushed lawmakers to respond more approprately. But I don’t think it was Ever right to say this was justsen to be worse than 2008-9, economically.
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