6 ms·

IMF sees pandemic causing global recession in 2020; recovery in 2021

31 points by hhs 7y ago

Communitivity 7y ago
That seems unrealistic to me. We are on the brink of a depression and I think if we go over that brink it will take a decade to fully recover. I hope I am wrong. From Wikipedia: "In most countries of the world, recovery from the Great Depression began in 1933. In the U.S., recovery began in early 1933, but the U.S. did not return to 1929 GNP for over a decade and still had an unemployment rate of about 15% in 1940, albeit down from the high of 25% in 1933."
- mcintyre1994 7y ago
  I'm not sure exactly how good a measure GNP is of this, but for what it's worth the US GNP both absolute and per capita was slightly above its 2008 level by 2010, and has kept climbing ever since. https://www.macrotrends.net/countries/USA/united-states/gnp-gross-national-product https://www.macrotrends.net/countries/USA/united-states/gnp-... By contrast the UK still hasn't come close to recovering to the same level: https://www.macrotrends.net/countries/GBR/united-kingdom/gnp-gross-national-product https://www.macrotrends.net/countries/GBR/united-kingdom/gnp... So maybe the US at least is in a better position than it was in the 1930's to recover on that measure?
  - ComputerGuru 7y ago
    I agree, but at the same time, 2008 was not as bad as 1929 to begin with, though.
  - lordnacho 7y ago
    How do the numbers work? You can see growth is positive in some years but the GNP is going down?
- autokad 7y ago
  this is all self inflicted, we could go back to business today if we wanted to, unlike in the depression, many banks went down along with their account holders. That's not to say we wont get there if we do nothing. If we are really going to do this grand experiment, we need a big stimulus to offset it. especially for small businesses. So many restaurant and bar owners will not be able to handle this. Unlike Jim Cramer who says 'we dont need to help the rich', many of restaurants and bar owners have no other source of income and lots of debt, thus will become insolvent fast and there will be no jobs to go back to if we do nothing.
- adventured 7y ago
  The great depression had numerous additional problems that do not exist right now, including a global tariff war that was far beyond anything that went on with the US and China. The central bank was mostly incapable of doing anything during the great depression. Today the central bank can shove $100 billion into JP Morgan if it's about to tip over and do it in a matter of hours. The Fed can set up a national small business credit line to the tune of $2 trillion and do it in a week or two (in this case the logistics are far more difficult than the money). The US had no social safety net at all in 1933. The US remarkably saw a decline in homelessness between 2004 and 2011, despite the great recession, due to the very successful housing first programs run by the Bush and Obama Administrations. The existence and expansion of food aid programs during the great recession helped to prevent large bread lines. The great depression had no such national effort, much less one that was rapid and effective. If we absolutely needed to do it, we can shovel $12,000 into the pocket of every adult in the country over the coming year. $36,000 per family of four. It would have a brutal cost, something along the lines of $3 trillion for a year. We would have to force our borrowing costs lower by using the Fed to manipulate those rates low, so we can afford to deal with the long-term costs of all of this - but we can do it. The US can't afford to spend $20 trillion on this diaster, but it can spend $3 to $5 trillion (and there will be hell to pay after, in the form of interest costs and plausibly tax increases (I won't hold my breath for fiscal responsibility in DC)). What we can't do, is allow this to happen again anytime soon, and that will require numerous large changes globally, including to international trade.
jamiegreen 7y ago
Who could foresee that shutting down most major world economies an for undetermined length of time could cause a recession?
- Daishiman 7y ago
  The pandemic experts who warned the world of the consequences of inaction did.
- fulafel 7y ago
  Pretty far from full shutdown still.
ropiwqefjnpoa 7y ago
It's possible, the market jumps at every little bit of good news. Once we are on the other side of the curve, we'll see what happens.
donw 7y ago
I rather doubt anybody knows what’s going on. Suddenly shutting down north of thirty percent of all global economic activity is absolutely uncharted territory.
- bad_user 7y ago
  On the other hand it's a straightforward economic slowdown, there's no hidden or surprising cause and effect, we understand what's going on. Before the pandemic there was no shortage of capital. We should be able to recover from it well. Unless we fail to contain this virus, or find a treatment for those severe cases and the situation lasts for months on end. In which case we're screwed :)
  - smdz 7y ago
    Probably not that simple. If we had a planned and publicly notified and unified worldwide lockdown and curfew for 20 or 30 days, including the stock markets - the recovery would have been sooner. People and businesses can take that hit. But with segregated efforts, some doing serious lockdowns and some not so serious lockdowns, where countries are interdependent, the timeline is unknown and hence the impact is unknown. Businesses might be able to stay healthy may be 15 days more. But beyond that is a strong possibility, and hence the economic impact is going to be much larger and uncertain.
foxyv 7y ago
Right now I'm gathering up as much cash as possible to buy throughout this downturn. I'm loving the cheap index funds. Then again I am saving it mostly for 10+ years from now.
- smartbit 7y ago
  Currencies are not as save bet IMHO. For years and years Central Banks have printed money (Quantative Easing). When people start to distrust a currency like Dollar or Euro we will see a economic downturn as not seen since 1929.
  - foxyv 7y ago
    Yeah, I'm mostly saving money instead of spending it and buying index funds.
neals 7y ago
Me and my SO have now almost fully recovered from COVID-19 after a rough few days. Now that I have these anti-bodies in my blood, should we not be allowed outside, spend our money and help the economy? There are must be at least 100 000 people in my (small) country that are now immune. A number that is growing faster than published number of infected. Let's make a plan for our return to society. Let us wear a mark or put a stamp in our passports or let's think of something clever. I feel like I could be doing a lot more than just working from home with my newfound super-power.
- wbronitsky 7y ago
  How do we prove, to everyone on the street for example, that you are immune? This problem is much thornier than you wanting to go outside because you believe you have already had and are now immune to this virus.
  - neals 7y ago
    I totally agree. I also don't really want to go outside. I've been working from home for 10 years. It's not about that. There is, however, a big opportunity here for thousands of people to contribute.
- zozbot234 7y ago
  If you've "almost" fully recovered, i.e. still showing symptoms, you're still shedding viral particles when you go out and putting others at risk. Wait 14 days after all symptoms have totally subsided, then going out would be relatively safe. But really, you should have multiple tests to be sure.
  - neals 7y ago
    Yes. But let's look ahead. What do we after that? How we help rebuild the economy?
    - threeseed 7y ago
      Stay. At. Home. One of the biggest problems right now is social behaviour. People see others on the street and downplay the significance of what is happening.
RalfWausE 7y ago
My (not entirely serious) plan for getting rich: Wait until the economy hits rock bottom and buy cheap stock on a wide range of economies, than forget them until my SO and i retire (round about 40 years from now), then rediscover our assets, sell and get rich
- TheSpiceIsLife 7y ago
  ~40 years from now: unexpected economic shock. Boom! You failed to time the market.
  - creaghpatr 7y ago
    You would hopefully alter your risk profile and adjust your portfolio accordingly ~40 yrs from now. Stocks/index funds are great for the young, gotta diversify into bonds etc later on.
- twomoretime 7y ago
  You're not going to time the bottom, but you can put a floor on your profits if you assume things will get back to where they were two months ago, and start buying little by little now. Because currently you can find many companies that are at 50% discount already.
  - rebuilder 7y ago
    Just don't pick companies that end up going bust.
    - twomoretime 7y ago
      Good point. This is still a highish risk investment, but again if you have faith in the government long term and distribute your investments, you should come out ahead.
- JohnJamesRambo 7y ago
  >Whether market timing is ever a viable investment strategy is controversial. Some may consider market timing to be a form of gambling based on pure chance, because they do not believe in undervalued or overvalued markets. The efficient-market hypothesis claims that financial prices always exhibit random walk behavior and thus cannot be predicted with consistency. https://en.wikipedia.org/wiki/Market_timing https://en.wikipedia.org/wiki/Market_timing What you are planning seems like a good idea but buying bottoms can be really hard. Lot of info in that wiki article. I like that you are thinking about it though! That already puts you ahead of a lot of the game.
smdz 7y ago
"Learning from the H1N1 pandemic" "A major contributing factor to some of the criticisms of the management of the H1N1 pandemic was that its mortality impact was considerably less than had been predicted. " "The documented worldwide mortality from H1N1 is 50–100 times lower than conservative pre-pandemic predictions and substantially lower than seasonal influenza deaths." Source: https://academic.oup.com/eurpub/article/22/1/7/489927 https://academic.oup.com/eurpub/article/22/1/7/489927 How do they make sure that the mortality rate is between 2-3%? Same goes for the hospitalization rate, based on which the entire flattening-the-curve decisions are made. From what we know many will recover with mild symptoms. Those "many" may not even be tested and accounted for total Covid-19 cases Edit: I'm not trying to dilute the seriousness of this situation. Just questioning the statistical models based on the source above
deleted 7y ago
[deleted]

31 points by hhs 7y ago

That seems unrealistic to me. We are on the brink of a depression and I think if we go over that brink it will take a decade to fully recover. I hope I am wrong. From Wikipedia: "In most countries of the world, recovery from the Great Depression began in 1933. In the U.S., recovery began in early 1933, but the U.S. did not return to 1929 GNP for over a decade and still had an unemployment rate of about 15% in 1940, albeit down from the high of 25% in 1933."

mcintyre1994 7y ago
I'm not sure exactly how good a measure GNP is of this, but for what it's worth the US GNP both absolute and per capita was slightly above its 2008 level by 2010, and has kept climbing ever since. https://www.macrotrends.net/countries/USA/united-states/gnp-gross-national-product https://www.macrotrends.net/countries/USA/united-states/gnp-... By contrast the UK still hasn't come close to recovering to the same level: https://www.macrotrends.net/countries/GBR/united-kingdom/gnp-gross-national-product https://www.macrotrends.net/countries/GBR/united-kingdom/gnp... So maybe the US at least is in a better position than it was in the 1930's to recover on that measure?
- ComputerGuru 7y ago
  I agree, but at the same time, 2008 was not as bad as 1929 to begin with, though.
- lordnacho 7y ago
  How do the numbers work? You can see growth is positive in some years but the GNP is going down?
autokad 7y ago
this is all self inflicted, we could go back to business today if we wanted to, unlike in the depression, many banks went down along with their account holders. That's not to say we wont get there if we do nothing. If we are really going to do this grand experiment, we need a big stimulus to offset it. especially for small businesses. So many restaurant and bar owners will not be able to handle this. Unlike Jim Cramer who says 'we dont need to help the rich', many of restaurants and bar owners have no other source of income and lots of debt, thus will become insolvent fast and there will be no jobs to go back to if we do nothing.
adventured 7y ago
The great depression had numerous additional problems that do not exist right now, including a global tariff war that was far beyond anything that went on with the US and China. The central bank was mostly incapable of doing anything during the great depression. Today the central bank can shove $100 billion into JP Morgan if it's about to tip over and do it in a matter of hours. The Fed can set up a national small business credit line to the tune of $2 trillion and do it in a week or two (in this case the logistics are far more difficult than the money). The US had no social safety net at all in 1933. The US remarkably saw a decline in homelessness between 2004 and 2011, despite the great recession, due to the very successful housing first programs run by the Bush and Obama Administrations. The existence and expansion of food aid programs during the great recession helped to prevent large bread lines. The great depression had no such national effort, much less one that was rapid and effective. If we absolutely needed to do it, we can shovel $12,000 into the pocket of every adult in the country over the coming year. $36,000 per family of four. It would have a brutal cost, something along the lines of $3 trillion for a year. We would have to force our borrowing costs lower by using the Fed to manipulate those rates low, so we can afford to deal with the long-term costs of all of this - but we can do it. The US can't afford to spend $20 trillion on this diaster, but it can spend $3 to $5 trillion (and there will be hell to pay after, in the form of interest costs and plausibly tax increases (I won't hold my breath for fiscal responsibility in DC)). What we can't do, is allow this to happen again anytime soon, and that will require numerous large changes globally, including to international trade.

jamiegreen 7y ago

Who could foresee that shutting down most major world economies an for undetermined length of time could cause a recession?

Daishiman 7y ago
The pandemic experts who warned the world of the consequences of inaction did.
fulafel 7y ago
Pretty far from full shutdown still.

ropiwqefjnpoa 7y ago

It's possible, the market jumps at every little bit of good news. Once we are on the other side of the curve, we'll see what happens.

donw 7y ago

I rather doubt anybody knows what’s going on. Suddenly shutting down north of thirty percent of all global economic activity is absolutely uncharted territory.

bad_user 7y ago
On the other hand it's a straightforward economic slowdown, there's no hidden or surprising cause and effect, we understand what's going on. Before the pandemic there was no shortage of capital. We should be able to recover from it well. Unless we fail to contain this virus, or find a treatment for those severe cases and the situation lasts for months on end. In which case we're screwed :)
- smdz 7y ago
  Probably not that simple. If we had a planned and publicly notified and unified worldwide lockdown and curfew for 20 or 30 days, including the stock markets - the recovery would have been sooner. People and businesses can take that hit. But with segregated efforts, some doing serious lockdowns and some not so serious lockdowns, where countries are interdependent, the timeline is unknown and hence the impact is unknown. Businesses might be able to stay healthy may be 15 days more. But beyond that is a strong possibility, and hence the economic impact is going to be much larger and uncertain.

foxyv 7y ago

Right now I'm gathering up as much cash as possible to buy throughout this downturn. I'm loving the cheap index funds. Then again I am saving it mostly for 10+ years from now.

smartbit 7y ago
Currencies are not as save bet IMHO. For years and years Central Banks have printed money (Quantative Easing). When people start to distrust a currency like Dollar or Euro we will see a economic downturn as not seen since 1929.
- foxyv 7y ago
  Yeah, I'm mostly saving money instead of spending it and buying index funds.

neals 7y ago

Me and my SO have now almost fully recovered from COVID-19 after a rough few days. Now that I have these anti-bodies in my blood, should we not be allowed outside, spend our money and help the economy? There are must be at least 100 000 people in my (small) country that are now immune. A number that is growing faster than published number of infected. Let's make a plan for our return to society. Let us wear a mark or put a stamp in our passports or let's think of something clever. I feel like I could be doing a lot more than just working from home with my newfound super-power.

wbronitsky 7y ago
How do we prove, to everyone on the street for example, that you are immune? This problem is much thornier than you wanting to go outside because you believe you have already had and are now immune to this virus.
- neals 7y ago
  I totally agree. I also don't really want to go outside. I've been working from home for 10 years. It's not about that. There is, however, a big opportunity here for thousands of people to contribute.
zozbot234 7y ago
If you've "almost" fully recovered, i.e. still showing symptoms, you're still shedding viral particles when you go out and putting others at risk. Wait 14 days after all symptoms have totally subsided, then going out would be relatively safe. But really, you should have multiple tests to be sure.
- neals 7y ago
  Yes. But let's look ahead. What do we after that? How we help rebuild the economy?
  - threeseed 7y ago
    Stay. At. Home. One of the biggest problems right now is social behaviour. People see others on the street and downplay the significance of what is happening.

RalfWausE 7y ago

My (not entirely serious) plan for getting rich: Wait until the economy hits rock bottom and buy cheap stock on a wide range of economies, than forget them until my SO and i retire (round about 40 years from now), then rediscover our assets, sell and get rich

TheSpiceIsLife 7y ago
~40 years from now: unexpected economic shock. Boom! You failed to time the market.
- creaghpatr 7y ago
  You would hopefully alter your risk profile and adjust your portfolio accordingly ~40 yrs from now. Stocks/index funds are great for the young, gotta diversify into bonds etc later on.
twomoretime 7y ago
You're not going to time the bottom, but you can put a floor on your profits if you assume things will get back to where they were two months ago, and start buying little by little now. Because currently you can find many companies that are at 50% discount already.
- rebuilder 7y ago
  Just don't pick companies that end up going bust.
  - twomoretime 7y ago
    Good point. This is still a highish risk investment, but again if you have faith in the government long term and distribute your investments, you should come out ahead.
JohnJamesRambo 7y ago
>Whether market timing is ever a viable investment strategy is controversial. Some may consider market timing to be a form of gambling based on pure chance, because they do not believe in undervalued or overvalued markets. The efficient-market hypothesis claims that financial prices always exhibit random walk behavior and thus cannot be predicted with consistency. https://en.wikipedia.org/wiki/Market_timing https://en.wikipedia.org/wiki/Market_timing What you are planning seems like a good idea but buying bottoms can be really hard. Lot of info in that wiki article. I like that you are thinking about it though! That already puts you ahead of a lot of the game.

smdz 7y ago

"Learning from the H1N1 pandemic" "A major contributing factor to some of the criticisms of the management of the H1N1 pandemic was that its mortality impact was considerably less than had been predicted. " "The documented worldwide mortality from H1N1 is 50–100 times lower than conservative pre-pandemic predictions and substantially lower than seasonal influenza deaths." Source: https://academic.oup.com/eurpub/article/22/1/7/489927 https://academic.oup.com/eurpub/article/22/1/7/489927 How do they make sure that the mortality rate is between 2-3%? Same goes for the hospitalization rate, based on which the entire flattening-the-curve decisions are made. From what we know many will recover with mild symptoms. Those "many" may not even be tested and accounted for total Covid-19 cases Edit: I'm not trying to dilute the seriousness of this situation. Just questioning the statistical models based on the source above

deleted 7y ago

[deleted]