In the words of the 1970s band Bachman-Turner Overdrive, “You ain’t seen nothin’ yet.”
While the above phrase may be a song lyric, it is very relevant to the current situation with the economy, for as poverty increases and COVID-19 forces the economy closed, the chief economist for Moody’s has declared that a second wave of COVID-19 will destroy the economy and worsen the current depression.
What many view as the cure to the current economic downturn could spur a far worse outcome, said Mark Zandi, Moody’s chief economist.
Several states have begun rolling back restrictions to reinvigorate economies slammed by the coronavirus pandemic. The gradual reopenings are meant to keep businesses afloat and stem additional job losses, but public-health experts have said that a premature return to norms risks a second wave of infections. Zandi shares the concern, telling CNBC’s “Trading Nation” on Friday that another outbreak would mean a much slower recovery.
“We may not shut down again, but certainly it will scare people, spook people, and weigh on the economy,” he said. “That would be the fodder for a depression.”
Zandi defined a depression as a year or more with unemployment above 10%.
Recent economic data has suggested that the US is already on its way to a prolonged slump. The Bureau of Labor Statistics reported on Friday that the unemployment rate spiked to 14.7% in April from 4.4% in March, with nonfarm payrolls sinking by 20.5 million. US joblessness is now at its highest since World War II and nearing peaks not seen since the Great Depression.
Hiring could bounce back starting in late May as businesses resume activity, but the lasting risk will weigh on economic activity for months to come, the economist said.
“We’re going to be in quicksand until we get a vaccine because of the uncertainty around the virus and the impact that’s going to have on consumers and businesses,” Zandi added.
Where Zandi sees reason to worry, markets are pricing in a swift rebound from recent lows. Major US indexes have staged a steady rebound from March lows, with the Nasdaq composite recently erasing all year-to-date losses on strong tech earnings.
The strong trends might be appealing to investors, but Zandi said he expected a correction before returning to past highs.
“The market is attaching a pretty high probability to a V-shaped recovery,” he said, adding: “I suspect that the script on this bear market is not over. We’re going to see the market have to reevaluate things at some point.” (source)
Please look at the current year as the “summer of the ant”.
This is YOUR time to prepare.
When the future comes, most people are going to be on their own when it pertains to economic matters.
Shoebat has noted that based on our evidence, there is a strong possibility for a major COVID-19 outbreak between September and November. Expect cases to taper off significantly during the summer, possibly to the point of almost disappearing, and then a major return that will cause widespread economic devastation, all in time for the final months of the election.
But now is not the time to party. It is the time to get read in the expectation- that hopefully will not come to pass -of another wave of COVID-19.
At the very worse, what will happen other than making more money and being able to pay off bills?