Economic pros and cons. I don't know which outweighs the other but there are powerful forces in play on each side of the equation. I'm going to be optimistic and believe in the can do ability and spirit of the American worker and business owner to be able to quickly bounce back.
There will be an increase in unemployment over the next couple weeks but nothing like what the fake media is pushing. Many of the people the fake media are saying are "out of work" are really working from home. They continue to be paid and do the jobs they were doing before.
The nation is not under lockdown. The media centered areas of the country (L.A and NYC) are and thus to the media the entire nation is under lockdown. That's just false. Most of the rest of nation with some exceptions are not being massively impacted.
It would be great to see some actual numbers but so far all we have are fears, guesses, and anecdotal info. We do know before all this started the economy was humming at about 3.1% GDP per Atlanta Fed tool.
The media and the left wants Trump to lockdown the entire country. So far he has resisted. This is important. Right now the economy is not "stopped". It's restricted in some areas and industries but it's booming in others. This is the power of capitalism in real time.
The economy SHIFTED in many ways as capital was reallocated by consumers from restaurants and bars to grocery and big box stores as pantries were stocked. It shifted from business travel to video conferences. It shifted from sporting events to video game downloads.
This SHIFT could not happen in a central command economy. For those industries and workers impacted by this shift like airlines, restaurants, convention centers the Federal Gov passed a bill this week to pay small businesses to pay their workers sick pay. They increased
unemployment compensation for the workers laid off. They have offered loans to ensure cash flow as revenue dries up. They are working on a $2 trillion fiscal stimulus to get cash into the hands of Americans and to support impacted industries. Will it be enough? IDK
The SHIFT is important. It means the economy is still functioning and won't need to be "restarted". Think of it as an engine idling instead of starting it in the dead of winter. To keep it idling the government is injecting fuel in the form of fiscal stimulus.
The injection is in the form of debt so that will take away from growth longer time. Eating the hamburger today and paying for it next Tuesday. Both can/should keep the economy idling in the sectors that need it for a short time. The SHIFT will keep much of the economy afloat
It won't last long term. The 1st quarter GDP is ending in 10 days. So the impact to this quarter should be offset somewhat by the 9 weeks before these last 3 weeks. The Second quarter starts Apr 1st. Say this lasts for another month from here that still leaves 2 months in 2ndqrt
3rd qrt should be fully back to where we were if things go as planned. That's a big if, I'll admit, but there it is. With the way the reporting of the numbers go and a recession needing two quarters of negative growth. There is a chance we won't see a recession.
This really doesn't mean anything except for psychology and animal spirits. There is a difference from telling people we had a recession and we avoided a recession. Some additional pros. We now have 0% interest rates and QE flooding the market. This will mean the liquidity is
there to issue loans and lines of credit to keep businesses in operation and workers employed. It should also translate into higher exports, higher home sales, car sales etc. We also have cheap energy with the crash of the oil markets. Bad for oil producers good for consumers
Savings should increase some during this period as people have less chance to spend but it may not as people go online to spend. Reasons to invest are high as stocks took a haircut and are priced for the end of the world scenario.
On the con side. We have shut down a large section of the economy. Millions are being impacted, small businesses are being hurt, some may not be able to recover. We are using a hell of a lot of debt to finance this. That bill will come due someday, somehow. There has been an
...incredible destruction of paper wealth as the stock market tanked and a major contraction of the economy on paper that may come back or it may not but right now it isn't there. Companies can still go to the capital market for funds but they are getting 1/2 of what they would
...have gotten before for the same equity stake. Imports and supply chain issues might be a problem as the rest of the world comes out of this at different times or goes into it after we come out. Travel and free flow of people and goods might be slowed/stopped
Companies may be forced to bring back supply chains and leave countries. This will hurt their bottom line and may delay expansion or hiring or it may force them to hire more here and increase GDP. There are so many unknowns that no one knows the answer. The good/bad news is
...there is nothing we can do about it atm in most situations. The die has been cast. The plans have been made. We can only batten up the hatches and ride out the storm. When it passes and moves on, we will all find out together if the plan worked or not. If the damage caused
was temporary or long term. We are locked and loaded for the next 9 days at least on this plan and nothing we say or do is going to derail that fact. Like I said at the beginning, I'm optimistic because of the can do spirit in America but I, like everyone else, don't know outcome
As always think as you will.
