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This seems far too optimistic on its face. Even if COVID were to disappear tomorrow, real economic damage has already occurred. That damage isn't going to dis

by mark-r 6y ago

This seems far too optimistic on its face. Even if COVID were to disappear tomorrow, real economic damage has already occurred. That damage isn't going to disappear just because it stops getting worse. The people who lost their jobs aren't going to start buying flights and hotel reservations for their next vacation, or even start going back out to restaurants.

dhnajsjdnd 6y ago
The economy has contracted substantially. This report projects growth from this lower base. That will leave an output gap between where we would have been sans pandemic (if growth had continued normally) and where we are. That effects you describe make up that output gap.
- mark-r 6y ago
  I still assert that the damage done limits the potential growth rate. It's going to be baby steps in the beginning.
yagi_baba 6y ago
Odds are the stock market comes back, CARES put in a decent amount of backstops for things like the mortgage industry and other 'big' sectors do they'll have available capital as we come out of this to start doing things that make their stocks more attractive. Also generally speaking good odds that industries like airlines and such can successfully lobby for more bailouts. So I buy the S&P will be up and we'll just all be ignoring the total gutting of small businesses. Plus if say you're a chain restaurant right now, the future probably looks bright. You had the credit to weather a year of takeout only. Meanwhile three of the four family restaurants nearby that you competed with are dead and gone. Basically very few folks who trade on the S&P went out of business, but a lot of their competitors did. Sure you'll have an entire cohort of newly impoverished that can't spend, but a bunch of your competitors went away. Going to be one of those summers where my ETFs are going up at the same time the food pantry is seeing record usage.
- enchiridion 6y ago
  The stock market is at an all time high...
  - latchkey 6y ago
    Not all stocks. The market is heavily disproportionate to fewer stocks than before and shifted to different industries. Some which are still struggling. For example, RDS.B.
    - edoceo 6y ago
      RDS=Royal Dutch Shell
    - garmaine 6y ago
      Yes but the full-market index is at all-time highs. Valuations have just shifted around.
  - LeonB 6y ago
    The stock market is very much not “the economy”
    - Trasmatta 6y ago
      Right, but they were responding to the part that said "Odds are the stock market comes back".
      - LeonB 6y ago
        Ah, fair enough.
  - ur-whale 6y ago
    >The stock market is at an all time high... More like the USD is at an all time low
    - 6y ago
hn_throwaway_99 6y ago
Actually, the current dichotomy in the economy could mean the rebound does happen quite quickly. Much of the country is, economically, doing great: they're still employed, they've been saving a ton of money because they're working from home, not traveling and not going out as much, and their home equity and stocks are doing great. Much of the country is doing horribly: their industries have been decimated, they're unemployed and way behind on rent. However, when a vaccine comes out, there will be huge pent up demand from the first group to go out and spend money, which will largely end up going to people in the second group. Small businesses have been killed but I think new businesses will open very quickly once the pandemic is over.
dageshi 6y ago
The people who still have their jobs, but have had nothing to spend their money on for 8 months probably will.

by mark-r 6y ago

dhnajsjdnd 6y ago

The economy has contracted substantially. This report projects growth from this lower base. That will leave an output gap between where we would have been sans pandemic (if growth had continued normally) and where we are. That effects you describe make up that output gap.

mark-r 6y ago
I still assert that the damage done limits the potential growth rate. It's going to be baby steps in the beginning.

yagi_baba 6y ago

Odds are the stock market comes back, CARES put in a decent amount of backstops for things like the mortgage industry and other 'big' sectors do they'll have available capital as we come out of this to start doing things that make their stocks more attractive. Also generally speaking good odds that industries like airlines and such can successfully lobby for more bailouts. So I buy the S&P will be up and we'll just all be ignoring the total gutting of small businesses. Plus if say you're a chain restaurant right now, the future probably looks bright. You had the credit to weather a year of takeout only. Meanwhile three of the four family restaurants nearby that you competed with are dead and gone. Basically very few folks who trade on the S&P went out of business, but a lot of their competitors did. Sure you'll have an entire cohort of newly impoverished that can't spend, but a bunch of your competitors went away. Going to be one of those summers where my ETFs are going up at the same time the food pantry is seeing record usage.

enchiridion 6y ago
The stock market is at an all time high...
- latchkey 6y ago
  Not all stocks. The market is heavily disproportionate to fewer stocks than before and shifted to different industries. Some which are still struggling. For example, RDS.B.
  - edoceo 6y ago
    RDS=Royal Dutch Shell
  - garmaine 6y ago
    Yes but the full-market index is at all-time highs. Valuations have just shifted around.
- LeonB 6y ago
  The stock market is very much not “the economy”
  - Trasmatta 6y ago
    Right, but they were responding to the part that said "Odds are the stock market comes back".
    - LeonB 6y ago
      Ah, fair enough.
- ur-whale 6y ago
  >The stock market is at an all time high... More like the USD is at an all time low
  - 6y ago

hn_throwaway_99 6y ago

Actually, the current dichotomy in the economy could mean the rebound does happen quite quickly. Much of the country is, economically, doing great: they're still employed, they've been saving a ton of money because they're working from home, not traveling and not going out as much, and their home equity and stocks are doing great. Much of the country is doing horribly: their industries have been decimated, they're unemployed and way behind on rent. However, when a vaccine comes out, there will be huge pent up demand from the first group to go out and spend money, which will largely end up going to people in the second group. Small businesses have been killed but I think new businesses will open very quickly once the pandemic is over.

dageshi 6y ago

The people who still have their jobs, but have had nothing to spend their money on for 8 months probably will.