“Second Great Depression 2020” ?
Why the headline Second Great Depression 2020?
Where. To. Begin.
Let’s take things from the top. The United States, despite repeated claims to the contrary from some econs and all of the pro-Trump media and online trolls out there, has not been riding ‘the best economy ever.’ On the contrary, it was riding a continuation of the Obama-Biden expansion, and was getting gutted by inequality and stock speculation put on steroids during the Trump years through things like the tax code and other less visible but extremely harmful austerity for the middle class, working poor and disabled poor; but socialism for the rich, Trump-GOP economic policies.
And the globe as a whole hasn’t been doing all swell, either, thanks to the never-ending xenophobic, isolationist, stupid trade wars that tossed the world into the Trump Slump its been in since 2018, with multiple individual nations already falling into Growth Recessions and outright Recessions as a result. Including the United States! (We’ve been in a modest Growth Recession prior to the coronavirus impact – putting us in a very weak and vulnerable state, despite the hot air out of the blowhard’s mouth).
Do you think a Second Great Depression 2020 Impossible?
Consider the following
CNBC: The upcoming job losses will be unlike anything the US has ever seen
When the damage the coronavirus inflicts on the U.S. jobs market becomes clearer, it could be unlike anything the country has ever seen.
Judging by a host of forecasts from economists, the avalanche of furloughs will easily break the record for most in a single month.
All true. But here’s where we and many others think CNBC may (or very likely) have it wrong.
While the headline unemployment rate is highly unlikely to approach the 24.9% during the Great Depression, it very well could be the highest in almost 40 years, something unthinkable for a jobs market that had been on fire as recently as February. https://www.cnbc.com/2020/03/20/the-upcoming-job-losses-will-be-unlike-anything-the-us-has-ever-seen.html
The reason for this is quite simple. Initial unemployment claims filed over just the past two weeks could very well add up to an official headline Unemployment Rate (U-3) of about 12.5% by the May report (covering April) using back of the napkin math, which is about all we can do right now. That’s. In. Just. One. Month. Do that for another month and you’re at fucking 24.9% headline unemployment, folks.
How do we keep from staying in a Great Hole 2020?
Here are some initial thoughts. Fire Trump. Fire the GOP. Send several of them to prison where the belong. Fire CEOs. Fire their accountants. Send several of them to prison where they belong. Sue the holy hell out of Fox News. Send some of them to prison where they belong. Just some early morning musings (opinions only).
But perhaps more realistically… We must not let the historically severe recession now unfolding to metastasize. One of the most critical ways we can do this is not practicing trade wars and beggar-thy-neighbor 1930s-style tariff economics. Like the kind we’ve been doing since Trump got elected and started playing with all his new toys.
It didn’t work out so well in the 1930s, and history looks back very unkindly at those who promoted these failed policies. A Second Great Depression 2020 could easily have its roots in these same failed policies with the coronavirus crisis trigger event.
Barron’s notes: Could Coronavirus Lead to a Depression? Economists Are Worried.
During the Great Depression, for example, U.S. economic output shrank 8.5% in 1930, followed by 6.4% and 12.9% decline, respectively, in 1931 and 1932. By 1933, the four-year contraction had left the economy only half the size it was in 1929. https://www.barrons.com/articles/coronavirus-recession-depression-us-economy-51584481953
MarketWatch notes: Echoes of the Great Depression? U.S. economy could post biggest contraction ever
The deepening coronavirus crisis is increasingly likely to hit the U.S. economy harder than at any time since the early stages of the Great Depression some 90 year ago…
The devastation could even rival some of the worst stretches in the early 1930s, when the whole world entered a prolonged slump. The U.S. economy shrank by an astonishing 13% in 1932 (the U.S. has annual GDP estimates for the 1930s)…
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. https://www.marketwatch.com/story/echoes-of-the-great-depression-us-economy-could-post-biggest-contraction-ever-2020-03-19
Some surprising candor from Trump’s former senior economist on CNN yesterday also actually seems to get it right:
CNN: Coronavirus could spark another Great Depression
The widespread shutdown of the American economy because of the coronavirus could spark a repeat of the Great Depression, former Trump economist Kevin Hassett told CNN on Thursday.
“We’re going to have to either have a Great Depression, or figure out a way to send people back to work even though that’s risky,” Hassett told CNN’s Poppy Harlow. “Because at some point, we can’t not have an economy, right?” https://www.cnn.com/2020/03/19/business/great-depression-coronavirus-kevin-hassett/index.html