During World War II, the President made extensive use of his war powers by ordering factories to manufacture war materiel. Of course, that cannot be done overnight. Likewise, it cannot be undone overnight either. Shortly after my father returned from the war in Europe, manufacturing actually dropped 5.4% in only ONE month. That hasn’t happened since then . . . until last month, when it dropped an astonishing 6.3%. Expect more of the same!
The speed of this collapse continues to amaze me. I have often thought economic data was a buffet, where you can pick the data you like. Now, everything on the data buffet smells rotten. Retail sales dropped 8.7% last month, more than twice as bad as the previous all-time record of 3.9% during the Great Recession. Housing starts dropped 22%. The consequences of the oil collapse will reverberate thru the economy, hitting parts of the country harder than others. Consumer confidence has plummeted, which is natural since the unemployment rates jumped from a 50-year-low of 3.5% to beat the Great Recession high of 10% in less than two months. Twenty-two million Americans lost their jobs in only 4 weeks. Unemployment will almost certainly reach 20%, which is close to the Great Depression rate of 25%
Anecdotally, I see emotional depression rising very rapidly, which is not surprising given the long grind of our never-ending lockdown, as well as the dawning realization that life will never be the same. With more time to sleep, I’m hearing friends complain of sleeplessness. Of course, my late mother always reminded me that “it is darkest before the dawn.”
There are positive things that do reflect “light at the end of the tunnel.” For example, I am proud of the Fed, which unleashed almost their full arsenal of weapons almost immediately. The President should never complain about the Fed again! Also, I am pleasantly surprised the bomb-throwing leaders of both political parties made nice long enough to actually toss a lifeline. Maybe, elected officials are not useless after all? While I worry about our President blundering into a reckless restart of our economy, it is comforting that so many detailed plans are being formulated. Plus, if we’re willing to learn from other nations, we can learn Germany for example, who just authorized a reopening of Mom & Pop retail stores.
And, there are at least 72 – count’em 72 – different studies underway to develop either a vaccine and a therapeutic treatment for this virus!
Do you really think we can’t figure this out pretty quickly?