The general election scenario that Democrats are dreading

[Newest Reality]

"We are about to see the best economic data we’ve seen in the history of this country," says a top former economic adviser to Obama.

In early April, Jason Furman, a top economist in the Obama administration and now a professor at Harvard, was speaking via Zoom to a large bipartisan group of top officials from both parties. The economy had just been shut down, unemployment was spiking and some policymakers were predicting an era worse than the Great Depression. The economic carnage seemed likely to doom President Donald Trump’s chances at reelection.

Furman, tapped to give the opening presentation, looked into his screen of poorly lit boxes of frightened wonks and made a startling claim.

“We are about to see the best economic data we’ve seen in the history of this country,” he said.

The former Cabinet secretaries and Federal Reserve chairs in the Zoom boxes were confused, though some of the Republicans may have been newly relieved and some of the Democrats suddenly concerned.

https://www.politico.com/news/2020/05/26/2020-election-democrats-281470

[Me.]

1. The Scare Tactic Meme Of The Day?

[Andy823]

4. Could be, but

the day is not over, and it seems everyday there are numerous scare posts, both sides are guilty posts and numerous right wing crap posts from "concerned" people.

[Newest Reality]

8. Personally,

I did not post it as scare post, but a potential speculative concern. I didn't indicate advocating the idea or not subjecting it to necessary scrutiny.

I don't particularly like scaring anyone.

I thought that users here would do more than complain, but point out the flaws in the idea rather than "complain" about the post. I would have posted my own commentary if I thought that that would be the depth of response to it. I have my views on the prognostication about the economy in relation to the impact of the pandemic.

Once could say, the day is not over and there are complaints rather than in-depth presentations of cogent counterpoints to address the issue and possibly challenge the point. Missed opportunity?

[Mike 03]

10. I didn't interpret this as a "scare post" at all.

This morning I called my mother to tell her what the markets were doing and we discussed our conflicting emotions about roughly the scenario outlined in the above article. It seems to me like quite a few others would be thinking about this too. IMO it's likelier that the markets will recover than the economy, but Trump conflates the two and his cult followers will be easily confused.

To complicate things, what if the market rallies on the "hope" of a Biden presidency and Trump takes credit for it and it actually affects the outcome of the election and Trump is re-elected? I worry about all sorts of (maybe crazy) scenarios, not all of them realistic. But times are strange.

[Girard442]

2. The only thing that's predictable now is that the rest of 2020 is unpredictable.

Well...Trump and the Republicans will always be assholes. That we can count on.

[budkin]

3. No way we dig out of this economic hole THIS YEAR

It's absolutely crazy to think so. It's literally not possible.

[Initech]

12. No it's going to take at least 5 years at a minimum.

And that's assuming that we get a vaccine in perfect timing. Seriously it could take decades to repair the economic damage this thing did in two months, and that's a conservative estimate. I don't know what fantasy world these guys are living in.

[SkatmanRoth]

14. It is going to take five years and a Democratic President at a minimum.

[ProfessorGAC]

5. That's Ridiculous

First, simple framing does the last 4 quarters.
They use Q3, we say "Not so fast. The year was..."
And, I'd like to know they expect 40 million people to be back to work, their bills up to date, and trigger sufficient consumption to be the best numbers ever.
Was the person who said this alive in the 90s?

[doc03]

15. I agree with it they aren't saying there is going to

be a full recovery. But we are going to have record breaking bounce. Say we have 20% unemployment and it drops back to 10% in one quarter that would be the fastest recovery in history. Fundamentally the economy was doing very good before COVID. Take the 2008 recession it took 7 years to cut unemployment in half.
That's why I think Democrats may have made a fatal mistake with all the damn stimulus they handed out. I talked to a guy last week that is out of work he said he has made twice as much laid off.

[ProfessorGAC]

22. Easy To Rebut

A bounce from a plunge caused by the same person taking credit for the bounce?
The economy was doing ok, not very good.
22% of growth above inflation was predicated on the delta of the deficit caused by the tax cuts.
We borrowed money to somewhat overstimulate an economy that was already cruising nicely.
Then over the last 5 years, far too many firms saw rises in D/E 6 - 10% relative.
Cheap money and added leverage allowed buy backs that inflated the indices and caused weak cash positions that were unable to sustain when cash flow from operations was extrinsically impacted.
The plunge to sub 19,000 was CV19. The overdue correction of the 12% annualized equity growth shows equilibrium between 23,500-26,000. About where it's been floating for a few weeks.
The economic fundamentals on the consumption side was not showing the same annualized rate of growth as real GDP. At the same time, GS rose at > delta GDP.
Lastly, recording short term bounces in economic condition is a hyper political endeavor.
Econometricians do not keep track of dead cat bounces. They acknowledge them as true for a day and move on.
They represent no actual shift in economic condition other than catch up spending.
And, given the huge UE numbers and bills being deferred, discretionary cash will not develop for carryout nsiderably more than 4 or 5 months. Many households are already 3 months behind.

[doc03]

24. What you say may be true but if there is a big jump

in GDP and unemployment drops say to 10% or even 15% Trump is going to claim the fastest recovery in history. I can the travel industry depressed for some time but most everything else will recover very fast. It's not like in 2008 where banks failed and realists collapsed. Explain your post to an average voter.

[ProfessorGAC]

30. Not As Hard As You Suggest

People can understand that a recovery from a disaster caused by the guy claiming victory is nothing.
Now, we haven't been good at sales, absent a highly charismatic candidate.
But, it's salable.

[alwaysinasnit]

6. I don't think the natural disaster recovery model is appropriate for our current situation, mainly

because this pandemic won't be contained for quite a while. In the meantime, people are not getting rehired very quickly, and when they are, businesses are offering less compensation and benefits. We will still see prolonged economic pain for workers, and likely permanent shuttering of a great many small businesses. Besides that, people will likely spend much less in general given the economic instability facing most of the population. Added to all that, most of the congressionally authorized relief funds don't seem to be providing relief where they would be most effective. I doubt this economy will significantly recover for the vast majority of people by the end of October. But, hey, I'm a pessimist, so what do I know?

[poli-junkie]

7. Plus we're still in the first wave of the virus as red states experience

an increase of cases. Then there will be the second wave this Fall -- Americans are not in a position to spend.

[Hortensis]

9. Uhuh. Hard to believe statistics about the very wealthy are going

to have the same reassuring effect. After all, many millions of people are lying awake at night realizing their health insurance only pays 70%, that their jobs might be gone next week, month or year, once unthinkable possibilities of major forced changes to their lives, and even destitution, keeping them from sleeping.

This virus is not going away, we're face a possible second spike in the first wave; and with the way our nation is acting the fall-winter/second wave is going to be very bad. The big question seems to be how many realize it before election day. Also, in spite of rage in the culture warriors, seems to me anger among most has been kept banked as they focus on dealing coolly with crisis.

A lot of companies have been shoring up dividends to shareholders, and it's possible they'll try to continue through the election, but not guaranteed. A lot of older voters get at least some income from those, and the prospect of losing even part has to be causing significant anxiety.

Home equity -- the big safety net of so many millions. Prices have mostly held so far because both sellers and buyers are holding back, but that will only continue for so long. The inventory of homes needing to be sold is growing, but the supply of buyers won't keep pace, and neither will prices. Commercial investors are jingling their gold in anticipation of great bargains in those markets.

Etc. on so many of our household concerns. Of course there're others -- like the huge coronavirus-national debt bomb that could go off under whole nations. The whole planet. Deflation? Stagflation?

[Me.]

13. I've Read That The Next Big Bubble To Pop

Will be commercial real estate

[Hortensis]

18. Bubble from outrageously low mortgage rates leading to outrageously

inflated RE prices meeting tapped out cash?

I shudder at the same on the residential side because our kids could end up in trouble with their home. I was an appraiser in California when the end of the cold war crashed the economy and huge RE bubble there. These days we can live for months on what our kids pay out each month on mortgage, property taxes and insurance. Property "values" dependent on interest rates staying dysfunctionally low, which they are -- so low a lot more people have been eagerly rushing into debt this spring. At least the down payments some could have to abandon are low compared to my day.

[Me.]

28. Here, Builders Like The Monster In THe WH

have been living high off loans, as far as I can see. They build building after building, get big loans and tax breaks. There are so many high rise buildings with incredibly low occupancy. So many ask with so many available apartments why are the rents so high. And the answer is they warehouse them. There is beginning to be a movement to stop all this, as well as the rents, demanded for retail space. So many empty storefronts is creating a blight in so many neighborhoods.The rent being asked is so astronomical I don't know how anyone can make enough to pay it, their staff decently and make a profit.

[Miigwech]

11. trump, repubs, GOP need to clear away the dead bodies first

before anyone will ever trust these deplorables ... and yes, they have proudly been trying to live up to that name. They are succeeding exceptionally well.

[lastlib]

16. Yep.

“We are about to see the best economic data we’ve seen in the history of this country,” he said.

And they're making it up now, as we watch!

If we see that kind of data, I would bet bullion to bones that it will be manufactured in the campaign wing of the White House.

[Demsrule86]

17. Sure...unemployment is over 20%

People are about to face eviction and foreclosure...this guy is clearly an idiot. But you concern is well uninspiring.

[greenjar_01]

19. ...

[SWBTATTReg]

20. I find this rather unbelievable. As an economic major (and minor too), I don't see anything like...

this occurring. If anything, I see new hot spots of the CV occurring, w/ some of them pretty severe and thus, continuing to drag down the economy/markets. People get pretty attached to their wallets and purses in times of economic stress, and I don't see anything different here.

And we're yet to see the impacts of the serious slowdown in the business cycles across the entire country yet too, reflected across income statements and / or balance sheets too.

And other countries are just starting down the difficult path that the US has been on (and will be on). Difficulties w/ China and others will continue to be an issue that rump stirred up for no good reason.

The list of excuses go on and on. I'd say watch gold and silver, and if they start spiking upwards in price, then the balloons have gone up and it's time to get out.

[empedocles]

21. With so many reports of the virus getting worse, any claim otherwise,

is going to get an audience of hopefuls.

[The laughable Laffer curve comes to mind]

[kcr]

23. Ridiculous

[pecosbob]

25. I don't think anyone but kool-aid addicts would accept the projected rebound as a win

My take from Las Vegas...forty percent of the workforce is still at home. The hospitality industry (the hotel-casinos) will open at best with about twenty percent of it's original workforce and is not likely to even be booking twenty-five percent of it's rooms until after the first of the year. The point being that they know there will not be demand. Bottom line is that twenty percent that lost their jobs here will not go back to their previous jobs...ever. Many businesses that are forced to find a way to get more work from fewer employees will not rehire cast-off employees.

I gave myself a damned haircut yesterday...doesn't look terrible.

[roamer65]

26. The 1918-1920 flu pandemic was 3 years and about 33 percent of world's population was infected.

I trust Angela Merkel’s prediction that 60-70 pct will be infected. So to get to that percentage, I would guess right around 6 years IF there is no vaccine.

We are NOT going to see a V shaped recovery. This will be like the long slog out of the Great Recession.

[Yavin4]

27. Basically, the guy in the article is saying, "we won't be as bad off in the fall as we are now."

But that doesn't mean that we will be on our way to recovery either. Global economic activity won't be rebounding any time soon. Cities like Las Vegas, Orlando, Miami, etc. that depend on foreign visitors coming to spend money won't be up and running, and there will be frequent outbreaks and spikes.

[Yo_Mama_Been_Loggin]

29. Doubtful the economy will turn around that quickly

[Chainfire]

31. It is simple

The country will not get back to normal until the medical crisis is resolved. Too many of us participants are more interested in protecting our lives than eating a McBurger.

[honest.abe]

32. I think this going to be a slow bumpy recovery.

No way things look rosey enough by Oct/Nov to benefit Trump. I think Fed Reserve Chairman Powell has it right.

Calling all current economic forecasts “highly uncertain,” Powell mapped out why he believes the economy may go through a series of peaks and troughs for at least a year or more as the world battles to keep the virus under control.

https://www.reuters.com/article/us-health-coronavirus-fed-powell-analysi/w-shaped-recovery-may-be-too-optimistic-feds-powell-suggests-idUSKBN22C1MU

[Vinca]

33. The numbers could be great, but if the job numbers go up 50% in the positive direction

from the current nightmare, that means they're still 50% down. The stock market isn't the economy, it's Main Street and I don't see a massive recovery until there's a vaccine. The antique shop I sell in will be struggling to stay afloat until then and all the other restaurants and shops around it are in the same boat. In any case, there is a more likely scenario IMO and that's a seasonal recurrence of the coronavirus that sends everything down the Trump crapper. There's no getting around his mismanagement costing more than 100,000 American lives.