The U.S. economy will probably slip into a recession this quarter and next. While the stock market is now back where it was three years and $11.5 trillion ago, unemployment has rocketed to catastrophic highs.
Goldman Sachs projects a sharp swing into recession with 6% negative growth in quarter one, and a 24% contraction in quarter two.
Because of the suddenness and intensity of job layoffs, economists fear this one will be worse than the Great Recession. Analysts say even the $2 trillion stimulus package won’t hold back a recession.
While people are lighting up Google search with queries for “coronavirus,” searches for “unemployment” and “recession” are far outpacing volume after the financial crisis. But we might be heading or a depression instead.
A recession is two consecutive quarters of negative GDP growth, while a depression is much more severe and lasts far longer. These five economists say that’s what’s coming.
Top Federal Reserve And IMF Representatives
1. Former Federal Reserve Vice Chairman Alan Blinder is now a professor at Princeton. He says the U.S. has probably already entered a recession, and if coronavirus worsens we’ll enter a depression:
We think of a depression as a recession that is very, very deep and very, very long. That’s the kind of thing that could happen.
2. Maury Obstfeld is a former chief economist for the International Monetary Fund. When asked if there’s ever been another time in U.S. history that the economy has been so widely interrupted, he said:
Well, maybe the Great Depression.
The Great Depression In Three Weeks
3. Nouriel Roubini is a NYU professor and was the top White House economist in the Clinton Administration Treasury Department. He is less reserved in his comparison to the Great Depression. His analysis is troubling to say the least:
The shock to the global economy from COVID-19 has been both faster and more severe than the 2008 global financial crisis (GFC) and even the Great Depression.
He says in both previous episodes it took three years for the economy to crash as far as it nearly has in three weeks. He writes the current situation is far more dire than the Great Depression:
Not even during the Great Depression and World War II did the bulk of economic activity literally shut down, as it has in China, the United States, and Europe today.
A Depression With Sharp Inflation
4. David A. Rosenberg is a chief economist and global financial strategist at Gluskin Sheff & Associates. Prior to that he was the Chief North American Economist at Merrill Lynch.
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