The questions that are generated from your friends regarding your exciting rendition of the boat affair are poignant. It is then that you realize that your answers may not be.
How long were you fighting the waves? How high were the waves? How did you manage to not fall into the water? Were you able to help sail the boat? How did the skipper manage to get you back safely?
The fact that you had never been on a sailboat before impacts your ability to answer the questions, let alone answer them correctly.
This is the exact scenario we face when policy makers try to predict what will happen to our country from an economic perspective post-pandemic. Indeed, in our modern world, this has never occurred before. We have never shut down every non-essential job in America before. We have never told our citizens that they must stay in their homes. Not for a day or a week, but for one or two or more months.
Thus, this writer can offer you no projections. By early April alone, 10 million people had filed for unemployment benefits. Easily this is likely to mean a 10% unemployment rate by as early as May 1, 2020. A rate that was 3.5% only 2 months earlier. And we know things will get worse. Economists are using words and phrases to describe the job situation such as monstrous, stunningly awful, and a portrait of disaster to describe the last two weeks of March.
There are few thoughts that can be garnered to explain the current economic situation. There are even fewer thoughts that can be used to predict the future. Simply, this has never happened before. This is an instant recession. There is no doubt that we will suffer a recession–it was manifested to happen when the labor force was told to go home.
There are already numerous articles written by economists which do predict recessions of immense proportions. Some even pointing to the most severe recession since the depression in 2008 as an indicator of what will soon occur in 2020.
None of the economic experts know what will occur. It is because this is the most unique economic setting in the history of our country. Not necessarily the worst setting, but the most unique set of circumstances.
This economy was enjoying an immense surge. A surge of unusual length. The constant rise in GNP and employment has been occurring for at least 7 years. If we liken this to playing Monopoly, our country was on Park Place. And then in weeks’ time, we were all sent to jail. And we cannot leave jail until the “turns” of others have been made. But currently, there are no others. The entire country is in jail. What will the board look like when it’s time to leave jail? That’s the question.
Do we look in the past at war-torn countries as examples for forecasting the length of time necessary for an economic rebound? Certainly, all jobs were eliminated. But the infrastructure in those countries was also eliminated. This is not the case in the U.S. (or in other developed countries). What occurred is that some gigantic parent yelled, “Time out. Go to your room!” So, what happens when we leave our rooms or when we leave the game’s jail?
Like the soaked mariner, I have no specific comments on projections. Watch and wait. And above all, do not read any economists’ projections on what is going to occur. The game is new. We cannot look at historical data to develop a useable model (there is no history here). Unfortunately, real projections cannot be made.