US, WASHINGTON (ORDO NEWS) — Former economic adviser to Donald Trump, and now CNN full-time expert, Kevin Hassett said the economic consequences of fighting the new coronavirus pandemic could spill over for the United States in a repeat of the Great Depression.
As a channel observer writes on CNN’s website, American economists are indeed inclined to believe that the country’s economy will suffer greatly in the near future, but at the same time believe that the recession will be short-lived.
The suspension of many American businesses due to the coronavirus pandemic could trigger a recurrence of the Great Depression, Kevin Hassett, an American economist and former Donald Trump administration official, told CNN.
“We will either have another Great Depression, or we will have to find a way to get people back to work despite the risk, ” the channel’s website quotes Hasset. “ After all, at some stage we will no longer be able to live without any economy at all, right?” .
According to a CNN columnist, amid such dismal warnings from Wall Street investment banks, they say the US expects a “historic-scale” GDP decline and job cuts. The pandemic has already led to an almost complete stoppage of the American economy – due to restrictive measures taken to combat the spread of the virus, retail outlets, casinos, restaurants and universities are closing down, once busy airports, highways and metro lines are empty and the factory is shutting down, writes journalist.
Hasset, who left the administration last year and is now CNN’s full-time expert, predicted that by the time US employment statistics were released in April, unemployment would reach “the worst you have seen,” he said the country could lose up to 2 million jobs. As the author of the article emphasizes, employment did not fall so much even during the economic crisis of 2008-2009: March 2009 was the worst in terms of relevant indicators, when 800 thousand jobs were lost. The worst month in history in this regard was September 1945, when the US economy began to go into peacetime – then 1.96 million jobs disappeared in America.
Mass dismissals in connection with the pandemic, meanwhile, have already begun, CNN commentator stresses: Union Square Hospitality, a New York-based restaurant chain, has announced that it will be forced to reduce its staff by 80% due to “almost complete loss of income” , dismissing 2 thousand people. In turn, the world’s largest hotel chain Marriott International, due to a decrease in passenger traffic, began sending employees on forced unpaid leave. The “myriad” of jobs in retail was also threatened – sellers also have to stay at home, the author notes.
Meanwhile, the number of requests for unemployment benefits in the USA jumped sharply: according to the latest data, from March 8 to March 14, 281 thousand corresponding applications were filed in the country, which was a record for the last two and a half years, the author continues. However, this, apparently, is only the beginning – as stated in the investment bank JPMorgan Chase, the number of initial requests for unemployment benefits should reach 400 thousand weekly in the coming weeks.
The cuts will cause a “severe blow” to the economy: according to Deutsche Bank estimates, US GDP in the second quarter may decrease by 13% year on year, which is one and a half times the most serious quarterly decline for the entire period of the financial crisis of 2008-2009 – then it became a record the fourth quarter of 2008, following which GDP fell by 8.4%, according to CNN. JPMorgan gives even more sad forecasts – according to experts, in the second quarter of 2020, the US economy will decline by 14%, the channel’s reviewer writes.
According to the journalist, such serious consequences of the pandemic for America are associated primarily with the fact that household spending is the main driver of growth – and now consumers are not able to spend money in shopping centers, cinemas and travel companies, since they are all either closed, or suspend work.
According to the forecasts of Deutsche Bank, the expenses of American households in the second quarter of the year will fall by 8.9%, and the cost of acquiring goods for this period will decrease by 13.6%; the cost of manufactured goods at the same time will collapse by 20%, which is already comparable with the corresponding statistics from the time of the Great Depression, the author lists.
There is, however, good news: since governments and central banks of many countries are taking measures to mitigate the economic consequences of the pandemic, experts expect the world economy, including the United States, to return to growth very soon, according to CNN. In particular, according to analysts at JPMorgan, US GDP will grow by 8% in the third quarter and by 4% in the fourth; in such a scenario, the recession will prove to be painful, but at least short-lived, the journalist admits. Nevertheless, if the situation with the pandemic by that time was not under control, the forecasts would not matter, he warns.
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