Trump will claim any positive number as a victory. Q3 '19 GDP growth was only 1.9%. He's probably already made the ad buys to celebrate the 2.7% Q3 '20 growth (or whatever it is). If he gets a 20% annualized bounceback in Q3 '20 - a massive "if" - he could win the election.
I just don't think the economist is correct. I understand his argument, and candidly, my firm is planning and preparing for a "V"-shaped recovery. Sharp drop, followed by a sharp ascent. We haven't furloughed a single billable professional, because management thinks the drop is entirely artificial, and once the artifice is removed, the increase will be nearly as sharp.
But we -- and the economist -- are wrong. And here's why:
1. American business has pursued pell-mell growth since 2009, with nary any serious attempt at cost savings. Cost savings is something that everyone likes to talk about, but no one likes to actually accomplish -- unless you're in the midst of the worst economy in recorded history. Then, companies like cost savings. We all know that 40 million jobs have been lost in ten weeks. 40 million will not be rehired in Q3. And know what else? We aren't done losing jobs. It might hit 60 million. My mental over/under is that we rehire, at peak, about 6 million between 7/1/20 and 9/29/20. American business is currently experiencing what it's like to have a dramatically reduced cost structure...and I think it's the way most businesses will want to play it in the face of an uncertain future.
2. A "V" bounceback is predicated on a miracle cure (miracle in terms of both speed and effectiveness). It's not coming. Remdesivir, Hydroxochloriquine, apricot pit extract; whatever it is, it's not going to have a significant enough impact to erase the public's fear. We're not getting drugs or vaccines that will effectively address the virus. So the public will not return to a business life.
3. If we can't return to a business life, we won't return to a for-pay social life. Ball games, dining out, attending church services...people won't go back any time soon. They won't spend any time doing anything social any time soon, despite the crowded beaches in the video. They can't. They're petrified. They read the web sites (like this one) that says 11 year olds are in danger from the coronavirus and make the connection that ALL 11 year olds are in danger and THEIR 11 year old will die. That's what the Elites have sold to the Great Unwashed Deplorables (GUDs).
4. And speaking of the Elites, they have underestimated the impact that their fearmongering has had on the GUDs. 40 million people out of work, and there are people on this web site who downplay the loss of a job. To the Elite, a job loss may not be much. Just get another one. Or start your own company. The GUDs are helpless and hopelessly screwed, particularly after July 31 when the $600 weekly stimulus check runs out.
5. 70% of the economy is driven by consumers. Thanks to all of the above, the consumers won't buy anything. NOTHING. Why would they? They can't trust a political/medical/media Elite who tells them what to do. "Yes, you'll lose your job, but at least you won't die." Because, you know, the virus has a 100% ifr. At least that's how the GUDs are interpreting the Elites' message.
6. Our relationship with China is on life support. They make most of what we buy. And China has never had any restraint in stealing IP, nor has it shown any restraint in their zeal to polluting their own country (a good friend of mine is a Chinese national who thinks the environment is the Achilles heel of China). Their cybertheft and cyberspying are breathtaking. They accuse the United States military of creating the virus. And they condemn our honest publication of the facts that if China had acted like literally any other country in the world, then far fewer people would be dead and sick. Instead, the Chinese threaten to withhold medicine they created for the American market. People are finally tumbling onto the fact that it is fundamentally an outlaw society.
Unemployment was 25.2% in 1933 at the nadir of the Great Depression. In 1939, it was still 19.0%. And you think this debacle will turn around?
I just don't think the economist is correct. I understand his argument, and candidly, my firm is planning and preparing for a "V"-shaped recovery. Sharp drop, followed by a sharp ascent. We haven't furloughed a single billable professional, because management thinks the drop is entirely artificial, and once the artifice is removed, the increase will be nearly as sharp.
But we -- and the economist -- are wrong. And here's why:
1. American business has pursued pell-mell growth since 2009, with nary any serious attempt at cost savings. Cost savings is something that everyone likes to talk about, but no one likes to actually accomplish -- unless you're in the midst of the worst economy in recorded history. Then, companies like cost savings. We all know that 40 million jobs have been lost in ten weeks. 40 million will not be rehired in Q3. And know what else? We aren't done losing jobs. It might hit 60 million. My mental over/under is that we rehire, at peak, about 6 million between 7/1/20 and 9/29/20. American business is currently experiencing what it's like to have a dramatically reduced cost structure...and I think it's the way most businesses will want to play it in the face of an uncertain future.
2. A "V" bounceback is predicated on a miracle cure (miracle in terms of both speed and effectiveness). It's not coming. Remdesivir, Hydroxochloriquine, apricot pit extract; whatever it is, it's not going to have a significant enough impact to erase the public's fear. We're not getting drugs or vaccines that will effectively address the virus. So the public will not return to a business life.
3. If we can't return to a business life, we won't return to a for-pay social life. Ball games, dining out, attending church services...people won't go back any time soon. They won't spend any time doing anything social any time soon, despite the crowded beaches in the video. They can't. They're petrified. They read the web sites (like this one) that says 11 year olds are in danger from the coronavirus and make the connection that ALL 11 year olds are in danger and THEIR 11 year old will die. That's what the Elites have sold to the Great Unwashed Deplorables (GUDs).
4. And speaking of the Elites, they have underestimated the impact that their fearmongering has had on the GUDs. 40 million people out of work, and there are people on this web site who downplay the loss of a job. To the Elite, a job loss may not be much. Just get another one. Or start your own company. The GUDs are helpless and hopelessly screwed, particularly after July 31 when the $600 weekly stimulus check runs out.
5. 70% of the economy is driven by consumers. Thanks to all of the above, the consumers won't buy anything. NOTHING. Why would they? They can't trust a political/medical/media Elite who tells them what to do. "Yes, you'll lose your job, but at least you won't die." Because, you know, the virus has a 100% ifr. At least that's how the GUDs are interpreting the Elites' message.
6. Our relationship with China is on life support. They make most of what we buy. And China has never had any restraint in stealing IP, nor has it shown any restraint in their zeal to polluting their own country (a good friend of mine is a Chinese national who thinks the environment is the Achilles heel of China). Their cybertheft and cyberspying are breathtaking. They accuse the United States military of creating the virus. And they condemn our honest publication of the facts that if China had acted like literally any other country in the world, then far fewer people would be dead and sick. Instead, the Chinese threaten to withhold medicine they created for the American market. People are finally tumbling onto the fact that it is fundamentally an outlaw society.
Unemployment was 25.2% in 1933 at the nadir of the Great Depression. In 1939, it was still 19.0%. And you think this debacle will turn around?
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