by Mitch Kokai
Senior Political Analyst, John Locke Foundation
The economic numbers are beginning to come in, and, predictably enough, just about wherever you check, they are appalling. In Pennsylvania alone last week there were more than 350,000 first-time claims for unemployment assistance. That compares with (seasonally adjusted) initial national claims over the last year averaging in the low 200,000s, and the news is only going to get worse in Pennsylvania and, probably, every other state. …
… Goldman’s economists are, however, anticipating that GDP will recover by (an again annualized) 12 per cent in the third quarter. But the damage inflicted on the economy is not going to be easily undone: Unemployment was expected to peak at 9 percent. Bad though that unemployment figure may be, my guess (and currently that is all that any forecast can be) is that it, along with hopes of a more or less V-shaped recovery, will turn out to be too optimistic. Even if the parts of the economy that have been braked or switched off were to start up again tomorrow, it would take a while for them to return to any approximation of business as usual.
Take a look at consumer spending, some 70 percent of GDP. Even if all the furloughed and the fired could resume what they were doing (or, in the case of workers from home, go back to the office), many of them will have drained their savings or gone deeper into debt. Meanwhile a good portion of those who have kept their jobs will have learned that they are more vulnerable than they might previously have thought.