A Stateside Story: Economic Rebound Coming Soon

Kevin Hassett, former chairman of the Council of Economic Advisors under President Donald Trump and now a  White House advisor: he doesn’t expect the U.S. economy to experience a V-shaped recovery without another round of “really solid legislation.”
Graph: The Recession of 1953 in the United States showing a classic V-shaped recovery (a sharp but brief period of economic decline followed by a strong recovery).  In blue:  percent change from preceding period in Real Gross Domestic Product (annualized; seasonally adjusted). Source: Bureau of Economic Analysis

by Mary Foran

According to Treasury Secretary Steven Mnuchin in an article for the Wall Street Journal, the American economy should bounce back in July, August and September as more and more States open up closed businesses in May and June. “As businesses begin to open, you’re going to see the demand side of the economy rebound,” he said.

Steve Mnuchin, shown here during his swearing-in as Treasury Secretary in 2017: “As businesses begin to open, you’re going to see the demand side of the economy rebound”

That resembles the forecast issued by the Congressional Budget Office, which expects a sharp contraction in this quarter and then growth at an annual rate of 17 percent in the second half of the year.

There are many unknowns to the rebound, including the spread of the coronavirus, the pace at which governors reopen their economies and concerns about the national debt. Mr. Mnuchin said the government should spend whatever is needed.

Kevin Hassett:  a V-shaped recovery not expected

Kevin Hassett, former chairman of the Council of Economic Advisors under President Donald Trump, said he doesn’t expect the U.S. economy to experience a V-shaped recovery without another round of “really solid legislation.” Mr. Hassett, who has returned to the White House as an advisor, expects the unemployment rate to approach Great Depression levels. The CBO projected a third-quarter unemployment rate of 16 percent and unemployment of 9.5 percent at the end of 2021.

The economic impact of the coronavirus lockdowns have been felt around the world, and the US is no exception. Retail stores such as JC Penney’s have been hard hit and are in talks to apply for bankruptcy protection. Restaurants have closed for good and many small businesses have had to ask for loans to survive the pandemic. Macy’s is reopening many of its stores in the States that have loosened restrictions, but things are far from normal.

It is reopening many of its stores in the US but things aren’t quite normal

Events such as the famous St. Paul Rodeo has been canceled, beer fests, jazz festivals, and Rose Festival Parades, and schools are wondering whether to open in the Fall or continue online classes.

The  upside of the stay-at-home orders has been a reduction in the amount of air pollution measured in large cities in America as people telecommute to work instead of hitting the roads.

Take-out meals have never been more popular, and everyone is learning to cook for themselves. At least the supermarkets are still open and the water and electricity hasn’t been shut off!

———

Images
Featured image (V-shape recovery)/JayHenry, PD
Quote mark/Oakus53, CC BY-SA4.0 via Wikimedia Commons
Steven Mnuchin’s swearing-in/PD
Kevin Hassett official photo, PD
Macy’s/Mike Mozart, CC BY2.0