COVID-19: What Is the Best Economic Prescription?

We won't have to wait too long to see who gets well and who dies.

by Eric Holdeman / May 19, 2020

From the NY Times, this short snippet below.

I'll share this first. 

  • Airlines are in trouble. There will be at least one that goes out of business and likely at least one merger.
  • As I shared earlier, Boeing is in trouble. Workforce reductions are being planned and without a federal bailout, the future is bleak.
  • The CEO of Boeing projects flying won't return to what it was for several years
  • The medical system in the USA is in trouble. Small hospitals and clinics will likely start failing this year.
  • More layoffs will be coming, this time from cities and counties. Even first responders will see layoffs.
  • Minimum of 20% budget reductions by most governments.
  • People will be slow to return to congregate places. They will be a wait-and-see attitude. The next 6-8 weeks are critical. For those places that opened up, will there be a significant spike in cases, hospitalizations and deaths?
  • Republicans are riding the horse of no new big funding bills. There is the old saying, when you find yourself riding a dead horse — dismount. I expect they will dismount in September if things remain bleak. 
 

Squabbles over the best economic medicine

 

There’s no doubt the U.S. economy is in tough shape now, enervated by two months of shutdowns and stay-at-home orders meant to slow the spread of the coronavirus. But disagreements are widening over what to do about it.

Start with the vital signs. The nonpartisan Congressional Budget Office now projects that unemployment will crest at 15.8 percent in the third quarter and that economic output will contract by 5.6 percent in 2020 — by far the worst year since just after World War II.

 

Treasury Secretary Steven Mnuchin and Jerome H. Powell, the chairman of the Federal Reserve, both told the Senate Banking Committee on Tuesday that the damage could be long-lasting if policymakers did not take action. But they offered very different prescriptions.

Mr. Mnuchin, who serves at the pleasure of President Trump, said the thing to do was to reopen the economy as quickly as possible and let it heal itself in the fall. He didn’t see an urgent need for more stimulus spending or aid to financially strapped states and cities.

 

But Mr. Powell, whose nonpolitical post affords him a bit more independence, warned that no matter how quickly restrictions were lifted, the economy could not fully recover until the health crisis was resolved and people felt safe resuming normal activity. He suggested that more government help would be needed to carry states, households and businesses through the crisis.

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