I hate to be so blunt, but it’s time economists begin at least using the D-word. Is is now a real possibility. I understand the need professionally to not sound alarmist, and not be alarmist, which could do more harm. But at least…. when we got real and acknowledged during the Global Financial Crisis that A SECOND GREAT DEPRESSION was truly on the table of real risks – and rising – then, and only then, did stubborn Republican policymakers take that shit real. Even with all of the response that finally came, we still had a Depression, “The Lesser Depression,” as it’s been called by some, but more often referred to as The Great Recession.
Moody’s Analytics Mark Zandi warns Wall Street is underestimating the damage from a coronavirus pandemic — both on the economy and President Donald Trump’s re-election campaign.
“Right now, we don’t have a whole lot of confidence. I mean he can’t seem to get on the same page with the experts, the CDC,” the firm’s chief economist told CNBC’s “Trading Nation” on Friday. “This is a significant threat to his re-election.”
Not only is the response to the medical emergency key, an economic downturn sparked by the coronavirus would be political kryptonite.
According to Zandi, the probability of a recession is jumping.
“They’re at least even odds,” he said. “If you take the most likely scenario and the CDC is roughly right, then it’s pretty hard to avoid one.”
The market’s historic correction suggests investors are cognizant of the recession risks associated with a coronavirus pandemic.
Stocks just saw their worst week since the 2008 financial crisis. The S&P 500 is off 14% since its Feb. 19 record high. It now sits at its lowest level since October. The Dow just saw its worst weekly point decline ever.
Despite the record losses, Zandi believes Wall Street is dangerously underestimating the magnitude of a recession.
“The general thinking at the moment is V-shaped — that this is a problem here and now. The Fed eases monetary policy, and we’re back up and running pretty quickly. I suspect that won’t be the case,” he said. “The Federal Reserve does not have a lot of room to maneuver… I don’t think policy is up to the task to really juice up this economy to get it going again quickly.” […] Click here to read the full story www.cnbc.com