Neel Kashkari has some bad news for America.
Things are going to get worse on the economic front, and demonstrably so.
Of course, this isn’t “news” to market participants or economists, but the reminder – delivered on ABC Sunday – is bad publicity for the Trump administration following the worst jobs report in US history.
Asked by George Stephanopoulos whether Larry Kudlow’s projections for a rapid recovery in the back half of 2020 and a “roaring” 2021 are “realistic”, Kashkari was dubious.
“You know, I wish it were, but what I’ve learned in the last two months is that this is more likely to be a slow, gradual recovery”, he sighed. “The virus continues to spread. People continue to get it. Unfortunately, people are tragically dying.”
Yes, they are.
It was a blunt assessment, to be sure, but one which is arguably more closely aligned to reality than that espoused by the “V” shaped contingent.
Neel wasn’t done. “If we see a lot of small businesses go through bankruptcy… you’re going to have empty strip malls for a while until new businesses form”, he went on to say, before noting that it’s all about confidence.
By “confidence”, Kashkari means that while there may be an initial bump when some businesses reopen due to pent up demand for things like haircuts, until there’s a vaccine or another medical breakthrough, a sustained pickup in economic activity could be indefinitely forestalled.
As far as the numbers we got on Friday are concerned, Neel didn’t mince words.
“[The unemployment rate] is really around 23, 24% of people who are out of work today, and if this is a gradual recovery the way I think it’s going to be, those folks are going to need more help”, he said.
We’re gonna need a bigger bailout, folks.
Illinois (suburban Chicago) Class B and C retail is dead. More than 40% ( and growing) of tenants stopped paying rent. Even “unnamed” tenants who are public companies that just completed a $300million debt offering for “general corporate overhead”.
This is very bad- what is not being fully factored in is the timeline to recovery- which is very, very long- if ever.
Even if a vaccine miraculously surfaces, people no longer feel “secure” and will modify behavior and spending patterns In preparation for the next wave…or in preparation for the next virus.
We are forever changed.
Agree. I have a friend with a small business that is barely hanging on and worried about how PPP forgiveness will be handled if things “don’t get back to normal by the end of June”. We unfortunately won’t be back to normal anytime soon, if ever. I hate to keep bringing this up but we’ve never had an approved vaccine for any virus of the corona family. We unfortunately have to adapt as it mutates year after year.
I hate to say never but 18 months is somewhere between wide eyed optimism and deus ex machina. Just building adequate manufacturing facilities is likely to drag it out a few more years and that is as you imply IF a suitable vaccine can be developed in the first place. I have seen some interesting ideas on the flu vaccine development front using multiple protein fragments from the main flu viruses which have show probable wide spectrum immunity. This could translate to RNA viruses but I would guess that’s 5-10 years out even with unlimited funding. We’re in this for the long haul now, social distancing and PPE is the permanent reality I suspect. Rapid testing capabilities could arrive sooner paired with smartphone tracking which is problematic yet solves a certain problem.
Good riddance to old style mall retail which was on life support long before COVID-19. Eliminating excess capacity is long overdue. This is a net positive from productivity and future growth as technology replaces humans. This is not dystopia, it is progress.