75
noted that the share of job losses classi-
fied as “temporary” fell from 88.6% in
April and May to 78.6% in June. In other
words, a larger percentage of the work-
ers stuck in that (still historically high)
unemployment rate won’t have jobs to
return to. That trend is likely to last be-
cause COVID-19 will force many more
businesses to close their doors for good,
and governments won’t keep writing bail-
out checks indefinitely.
These factors lead us toward the third
definition of depression: a slowdown that
will last longer than recessions of the past
80 years. The Congressional Budget Of-
fice has warned that the unemployment
rate will remain stubbornly high for the
next decade, and economic output will re-
main depressed for years unless changes
are made to the way government taxes
and spends. Those sorts of changes will
depend on broad recognition that emer-
gency measures won’t be nearly enough
to restore the U.S. economy to health.
What’s true in the U.S. will be true every-
where else.
In the early days of the pandemic,
the G-7 governments and their central
banks moved quickly to support work-
ers and businesses with income support
and credit lines in hopes of tiding them
over until they could safely resume nor-
mal business. The Fed, European Central
Bank, Bank of England and Bank of Japan
threw out the rule book to add unprece-
dented support to ensure markets could
continue to function.
This liquidity support (along with opti-
mism about a vaccine) has boosted finan-
cial markets and may well continue to el-
evate stocks. But this financial bridge isn’t
big enough to span the gap from past to fu-
ture economic vitality because COVID-19
has created a crisis for the real economy.
Both supply and demand have sustained
sudden and deep damage. And it will be-
come progressively harder politically
to impose second and third lockdowns.
That’s why the shape of economic
recovery will be a kind of ugly “jagged
swoosh,” a shape that reflects a yearslong
stop-start recovery process and a global
economy that will inevitably reopen in
stages until a vaccine is in place and dis-
tributed globally.
What could world leaders do to
shorten this global depression? They
could resist the urge to tell their people
that brighter days are just around the cor-
ner. People need leaders to take responsi-
bility for tough decisions.
From a practical standpoint, govern-
ments could do more to coordinate virus-
containment plans. But they could also
prepare for the need to help the poor-
est and hardest- hit countries avoid the
worst of the virus and the economic con-
traction by investing the sums needed to
keep these countries on their feet. Today’s
lack of international leadership makes
matters worse. If COVID-19 can teach
world leaders the value of working to-
gether to avoid common catastrophes, fu-
ture global emergencies will be that much
easier to manage for the good of all. Un-
fortunately, that’s not the path we’re on.
Bremmer, a TIME columnist, is president
of the Eurasia Group
^
A London coffee shop sits closed as
small businesses around the world
face tough odds to survive
ANDREW TESTA—THE NEW YORK TIMES/REDUX
