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I think it depends on the "second wave"
If there is one, and it's significant... Multiyear depression.
If we "get back to it" by June and that's it.... Sure it'll suck for some, but others will go on a spending spree to "make up" for the last couple months.
JMHO.
Yes, I think it precisely depends on this - we are at the mercy of the virus right now.
Even in a best case scenario, just social distancing means a big contraction of economic activity. Can't have sports, festivals, concerts, etc.. and we are getting into travel season. That's billions lost - that means recession for sure, but the kind we can weather.
If the virus rears its head after the re-openings and we have to lock down again, it's Katy Bar the Door time.
I don't know if I agree with that. It's certainly going to be sharp, but I don't think it's going to last a decade. That's because the Great Depression was not due to the crash on Wall Street, but instead resulted from the boneheaded government measures that followed.
14 months after the crash of 29, the unemployment rate was at 8.7%. Not good, but not catastrophic. But beginning in 1930, there were a number of government measures and unforced errors that were outright stupid. The Hawley Smoot Tariff Act hurt international trade deeply. The Federal Reserve reduced the money supply by a third. And Federal taxes were jacked up to stratospheric levels. The top income tax rate went from 25% to 63%, but income taxes rose across the board. The combination of these measures not only eliminated all incentive to invest and rebuild, but kept liquidity out of a market that needed it desperately. And Roosevelt came along and doubled down on the measures that Hoover undertook. In fact, Henry Morgenthau, FDR's Treasury Secretary, credited Hoover with providing the new administration with the foundation for the New Deal.
The other thing I'd offer is a theory I've read a lot. Namely that the reason the recession cycle has become so prolonged over the past several decades is because supply chain has become so much more efficient, reducing excess inventory and costs. Of course, with the wholesale disruption of supply chain from China in the months to come, it will be interesting to see how well companies will be able to limit the damage by shifting production elsewhere.
Taxes had been lowered throughout the 1920s and early 1930s. When the crisis got worse and tax receipts declined, the Hoover administration freaked out. Deficit spending outside wartime was something that political leaders back then had a hard time wrapping their heads around, and they were more concerned about debt back then than we are now. The dollar was also not the world reserve currency back then, an advantage 1931-32 America didn't have that we take for grated today.
Smoot-Hawley didn't help things, but keep in mind that the depresison was global. Germany - the 2nd or 3rd biggest economy in the world (basically China's current position) never really recovered from WWI and was a house of cards. The nature of the sectors the depression hit - heavy industry especially - meant that both Germany and U.S. were relatively more susceptible to its worst effects. France and Britain did somewhat better since they were not so dependent on things like auto manufacturing.
The idea that the government should just spend-spend-spend to combat a recession/depression was incomprehensible to people like Hoover and even on the fringe of the thinking of FDR.
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In fact, Henry Morgenthau, FDR's Treasury Secretary, credited Hoover with providing the new administration with the foundation for the New Deal.
Keep in mind that Morgenthau was one of the most conservative members of the FDR administration, and not necessarily a reliable source. That quote only reflects his opinion. He believed that a balanced budget should be the highest priority and was always the one arguing that New Deal programs should be smaller, temporary, and limited in scope. He was not a liberal like Sec of Agriculture and later Vice President Henry A. Wallace, who would certainly have argued that they did a LOT more than Hoover did.
But certainly, the Fed and antiquated thinking coming out of the federal government at that time made things worse.
Last edited by redguard57; 05-03-2020 at 05:02 PM..
Many are in denial, and let's be honest most Americans are clueless and very self involved. They don't pay attention, don't question anything
Stuff like this usually comes from folks who greatly overestimate their own insight and wisdom. Dial down the douche-meter please, it's not a good look.
Quote:
Originally Posted by seain dublin
July 2021?
They won't be here in July 2020
Bookmarked. We'll revisit the thread in 3 months to see if restaurants and small businesses exist.
Yes, I think it precisely depends on this - we are at the mercy of the virus right now.
Even in a best case scenario, just social distancing means a big contraction of economic activity. Can't have sports, festivals, concerts, etc.. and we are getting into travel season. That's billions lost - that means recession for sure, but the kind we can weather.
If the virus rears its head after the re-openings and we have to lock down again, it's Katy Bar the Door time.
The big problem with the "fail" scenario is a complete loss of confidence in the authorities. At that point, I think things devolve down more to state and even local governments where it becomes basically every region for itself.
I really wouldn't be surprised to see some sort of regional councils develop. I live in extreme northeast TN, less than a mile as the crow flies from the VA line. This area has had 320 something infections in an area the size of NJ. Combined pop. ~500,000.
I could easily see a regional council from Knoxville, TN, to Asheville, NC, to Roanoke, VA developing to keep people out from more infected areas of these states. The state capitals do not have our interests in mind.
Maybe this is my small town/rural/Appalachian perspective, but we're not seeing much of this here.
TN gave restaurants a chance to reopen about a week ago. Almost none of the chain restaurants have opted to reopen locally. Many local restaurants are reopening, and most have quite a few patrons.
I went out to dinner Wednesday night - local "American" restaurant, about half full, but that was the first day and it was cold and raining. That same restaurant had a line by 6:30 Friday evening. I went to a brewery/restaurant in another city yesterday for dinner that was virtually full. I stopped by a beer garden after that which was nearly full. A book store I went to was very busy.
I haven't seen a single store around here boarded up. Most are on Facebook chomping at the bit to reopen if they haven't done so already, and expect to. While a lot of places haven't opened up quite yet, many places that weren't had signs out for the next week or so.
That's encouraging although I'm guessing some of the lines are because capacity is being limited?
anecdotally at least, most of the people I know in white collar jobs have not been laid off or impacted. I talked to several of them and most are optimistic that they will not be affected. Perhaps it's naivete I don't know. Most people the current problem only affects certain sectors that are directly related to social interaction - restaurants, travel, sports/entertainment etc. The rest, it is argued, are immune to this crisis because they can "work from home"....
What's different now vs the Depression is that we have a more activist Fed and Congress instead of a "do nothing for 3 years and let the market correct itself" approach. The Fed is doing pretty well for injecting liquidity and supporting businesses through their lending facilities.
But you're generally right a full recovery will be years. Congress has not spent enough money to fully stimulate and prevent the maximum amount of job losses. Republicans are concerned about the debt now so it'll be hard to pass any package that contains much more stimulus. Little do people know - this will cause the current recession to be worse. Hang onto your horses. This is what happens when you have philosophical nut-heads running the government and don't understand economics.
This virus which does exist but made out worse than it is the excuse that both parties need to blame the collapse of the US economy. Just this week in CA thousands of healthcare workers and that include doctors were laid off.
Have a friend in another state who is a nurse, she along with her coworkers have been furloughed. The network she works for has 8 hospitals, they have a total of 77 COVID cases.
The can of debt has been kicked down the road the last 20 years, no manufacturing jobs, China owns a lot of property in the US(including a lot of CA), funny how we had all those fires at night in Dec when the temps were in the 60s...all starting in different areas and at night and spreading like we have never seen before.....oh but that is being a conspiracy nut LOL...no, that is doing some critical thinking when something doesn't add up
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Originally Posted by beachmouse
I think it's more they're worried about general theft when no one's around to keep an eye on things. I've seen a decent number of temporarily closed businesses here put up their hurricane panels. They're pretty straightforward to take off when the viral storm seems to be ready to pass- just be careful because the edges on some of them can be quite sharp.
Not quite, live in CA most of my life. I lived the LA riots of 92 first hand. It was 28 years ago last month, and I can remember it like it was yesterday. You could feel the frenzy in the air and it was building,. I remember trying to get home and people were running red lights, honking horns in panic. This isn't a city where people honk the horns that much...LOL.
They're doing this because since this lockdown started I had concerns of a repeat. If you don't know about the 92 riots when you have time and go on You Tube. Massive looting and burning down of the stores.
Other cities are doing this well, it goes beyond someone breaking in and stealing a pair of expensive shoes.
You have people who lost their jobs, can't get through to unemployment, some who have applied still waiting on a check 4 weeks later.
This virus will never completely go away, there will never be no cases, and vaccines can take years.
People need to educate themselves(some do) and think about the real facts about this virus. 98& are recovering, hospitals as I already mentioned are not packed, they're empty for the most part.
So let's see, what is worse a virus that has probed fatal mostly to people who are elderly or have very serious health issues that were not something they could recover from, now I know there were some who did die(or were told that) and again that is sad.
But to put a country into a depression, cause possible civil unrest, and you end up with troops on the streets(we did in LA for a week and were under Martial Law).
All the job losses, all the small business that won't be coming back
For this? That is insane, it will hit more people once they get a dose of reality., many are too busy in their house watching Netflix, and think once their state lifts the lockdown everything will be the same....they're in for a very rude awakening.
anecdotally at least, most of the people I know in white collar jobs have not been laid off or impacted. I talked to several of them and most are optimistic that they will not be affected. Perhaps it's naivete I don't know. Most people the current problem only affects certain sectors that are directly related to social interaction - restaurants, travel, sports/entertainment etc. The rest, it is argued, are immune to this crisis because they can "work from home"....
That's great for them. But it's not the truth, I Know 3 people with white collar jobs who have been laid off.
Two nurses who have been furloughed.
Here in CA thousands of healthcare workers were just laid off including doctors.
So no one is immune.
And working from home doesn't mean you can't get laid off...SMDH.
A company does layoffs they don't forget about people who work from home. You see "out of sight out of mind" doesn't work in that case.
Naïve is a nice way of putting it.
You and your friends must be in your 20s, you don't really have a handle on how things work in regards to economics, use the time you have now to educate yourself.
I have a few clients that are busier than ever in this economic climate. More and more businesses trying to move operations online and getting logistics moving. Trucking business will be revived as they are hiring as many truckers now more than they did last year. Whenever truckers are hired the economy is doing well.
While there are lots of layoffs and furloughs those unfortunately not in industries that are agile enough to weather through this world wide problem. If you been let go or furloughed, it's not a bad time to start learning new skills while the government will be giving handouts. Try being let go 2-3 years ago and you get 6 month of UBI at most. Now you can get possibly 12-18 months of UBI. Time to start learning new trade or skills to do your work online or start a small business to weather through this.
I was listening to the latest iteration of the Afford Anything podcast (Paula Pant) and she was discussing a report by Morningstar that basically offered one theory as to why the stock market is essentially at 2019 levels.
The report supposedly says that the areas of the economy affected are rather narrow and only form 15% of GDP but employ about 30% of the workforce. So, even though the absolute numbers of unemployed are high those are workers who make relatively less impact on the GDP. Further the stimulus (SBA PPP, enhanced unemployment etc.) is going to recapture the missing demand from this group.
The bulk of the workforce are still employed and have either seamlessly switched to remote work OR they are deemed essential workers who are working on site full time, says the report which is why the impact on the economy should be minimal.
Not quite sure, but I am skeptical of this analysis. Thoughts?
We went to a flower stand this weekend. Usually we go once a year and see a handful of people. This weekend it was jammed packed and tons of people. We ordered sandwiches from a local restaurant and had to wait over an hour because they were backlogged. The grocery stores and big box stores have full parking lots. I saw lots of social media posts of people getting wine fairies leaving them gifts of wine and random stuff. So I don’t know who is suffering or being poor, but not seeing it in my area.
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