28 NEWSWEEK.COM MAY 22, 2020
THE ECONOMYt’s been a crazy couple of weeks in the
pandemic economic prediction business.
So crazy that even the White House
can’t get its stories straight. In one corner
President Donald Trump’s advisor/son-in-
law Jared Kushner and US Treasury Secretary Ste-
ven Mnuchin told us that happy days will be here
again—and the country “rocking” by July. In the
other, former White House Council of Economic
Advisors chair and now White House consultant
Kevin Hassett called the economic situation “grave.”
(Granted, he was quickly told to knock off the
“gloom and doom” by his colleague, Peter Navarro.)
But be wary of those rosy forecasts put out bymarket analysts and the White House. It’s going to
take a while. Exactly how long depends on science,
not politics, as Warren Buffett said on April 2 at
Berkshire Hathaway’s annual meeting.
Nobody likes that answer. But Hassett, before his
time ran out, was simply saying what most econo-
mists are saying. His mistake was being honest and
saying it in words we can all understand— instead
of talking about V-, L-, W-shaped recoveries and
SAARs (seasonally adjusted annual rates.) As Bart
van Ark, global chief economist at The Conference
Board, says, “Growth rates are confusing. Of course
we’ll get a recovery. If one store opens, that will be
a recovery. That doesn’t mean we’ll be anywhere
close to where we were.”
Recovery starts when the economy bottoms out
and shifts from negative growth to positive. But
what the person-on-the-street means by recovery
is when we will get back to where we would have
been without COVID-19. That’s not going to happen
for a while. Oxford Economics is predicting the US
economy will contract by -12 percent in the first
half of the year and then grow slowly. (Arithmetic
alert: Even recovering at the same rate doesn’t get
us back to level. If the economy contracts by 12 per-
cent over six months and then expands by 12 per-
cent over the next six, it will end the year smaller.)
Here’s what the experts told us will happen—
in English:*RRGQHZVɿUVWDon’t panic. We aren’t headed for
a Great Depression. During the Great Depression the
economy went backward for four years in a row. Da-
vid Wessel, director of the Hutchins Center on Fiscal
& Monetary Policy at the Brookings Institution and
winner of two Pulitzer Prizes says, “We aren’t going
to repeat the 1930s: Monetary and fiscal policy have
responded aggressively and quickly. Congress hasn’t
done all that it should...but both Congress and the
Fed saw the economic threat and acted. They learned
both from the mistakes of the 1930s and from those
made just a decade ago in the Great Recession.”ţ7+($5&2)$',6$67(5,69(5</21*
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