2008-09 vs. 2020-?

Good contrast between the economic challenges of 2008-09 versus the economic fallout from the coronavirus via Ezra Klein:

In a nutshell: “In 2008, economic policy was motivated, albeit imperfectly, by the single question, “How quickly can we get the economy back to normal?” In 2020, we face two questions in conflict with each other. First, how do we stop mass deaths from coronavirus? Second, how can we make sure there’s an economy to come back to, once we can get back to normal?

Preventing a mass failure of small businesses is critical to the latter point. Doubtful that a $367 billion small business loan facility is up to the job. For a sense of scale, the Federal Reserve’s Financial Accounts (or “Flow of Funds”) data show that the non-financial, non-corporate business sector (encompassing small businesses) had $8.8 trillion in total liabilities, including $4.2 trillion in mortgage liabilities, outstanding on their balance sheets at the end of 2019 (see Table B.104, Lines 26 and 30).

I also liked this reframing of how to think about unemployment in the present crisis via economist Christina Romer (UC Berkeley, formerly Chair of the Council of Economic Advisors under President Obama):

“I feel like we need a new term for the kind of unemployment we’re going to have,” says Christina Romer, the Berkeley economist who led President Obama’s Council of Economic Advisers during the financial crisis. “It’s not cyclical unemployment. It’s quarantine unemployment. Businesses aren’t allowed to operate. People aren’t allowed to be out of their home. The idea that if you just give people money it’ll somehow prevent the unemployment rate from skyrocketing makes no sense. No amount of demand stimulus will get people to go to restaurants if they’re closed.”

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