Fed's Kashkari throws cold water on White House optimism about a 'snapback' economic recovery

[denem]

Source: Market Watch

A top Federal Reserve official on Sunday threw cold water on White House optimism about the ability of the U.S. economy to forge a ‘snapback’ recovery from coronavirus-inflicted damage.

A trio of White House economic officials went on Sunday news shows and said they expected a very strong second half of 2020 and a roaring 2021. Asked on ABC’s “This Week” if this was a realistic forecast, Kashkari replied: “I wish it were.”

“What I’ve learned in the last few months unfortunately is that this is more likely to be a slow, more gradual, recovery,” Kashkari said.

“The virus continues to spread. And when we look around the world, there is evidence that when countries relax their economic controls, the virus tends to flare back up again,” Kashkari said.

Read more: https://www.marketwatch.com/story/feds-kashkari-throws-cold-water-on-white-house-optimism-about-a-snapback-economic-recovery-2020-05-10

[Wellstone ruled]

1. Kashkari knows of what he speaks.

Those who believe in a snap back recovery are just carrying water for Trump's reelection pure and simple. Again,there is zero correlation between the real economy and Wall Street Averages at this time.

[katmondoo]

2. The west wing in the White House is probably infected. We will hear of more soon.

[Scarsdale]

11. Well, I will use a quote

from our Forst Nakid Lay-Dee "I really don't care. Do U?" The suck-ups in the WH will say anything to keep Donny Boy calm. They seem to be terrified of his temper. He might even FIRE them, from their cushy positions.

[genxlib]

3. That is still only half an answer

Although I will give him credit for that half.

He is still blaming whatever slow recovery takes place on however long the virus keeps us hunkered down. This belies the fact that the actual damage done to the economy will also take some time to recover.

There are three categories of losses

1) economic activity that is lost and can not be recovered.

2) Economic activity that is delayed but still represents pent up demand.

3) Economic activity that is lost due to permanent changes in trust and behavior.

We do already know there is a lot in category 1. You will never go back and get three extra hair cuts for the ones you missed. Nor will there ever be a 2020 NCAA Basketball Tournament or 2020 SXSW. It's gone forever. Even if a cure was found tomorrow, that damage will take some time to recover.

When we do emerge, Category 2 will have some restorative effect so that it will bounce back part of the way. People will need to buy things like cars, clothes and appliances that they did not get for several months. That will bounce us part of the way back. Maybe 1/3 at best.

The real question will be Category 3. Even when this virus is gone, there will be a severe dampening effect on travel, dining, concerts, etc. for the foreseeable future. I think the degree of that dampening will be determined on the degree of death and destruction. If it were to go well from here on out, the rebound to public life might be quick. If it goes as badly as we expect, people could be permanently traumatized from public activity.

[DallasNE]

7. How Did Item 3) Respond Following The 1918 Spanish flu

Granted, that strain of the flu did not return, at least in any degree, and we don't know what the history of this pandemic will be. Granted, there may not be data available to make much of a determination. But I do know this much, I will limit my trips out in the public, social distance, wear a mask, use hand sanitizer and wipe down cart handles until the data can be determined that the virus is wiped out, either on its own or by a vaccine.

[PatrickforO]

8. I like your point three, because it seems to me that the entire leisure

and hospitality sector will have to rethink how it function, what it offers, how services are provided, what face to face interactions will look like.

For instance, take the downhill ski areas. It will be years before they recover to pre-COVID levels, if ever.

And what about big parks like Disneyland? They will surely have to make major changes, if they survive at all.

Small businesses? Over half of them are worried about having to close down. What will that do to us?

[genxlib]

17. I can't even imagine how Disney can function under social distancing rules

Not at anything like their previous capacity.

Looking back at their entry procedures it was a germ spreading disaster. Every person entering had to put their fingers down on fingerprint readers. A single infection could expose thousands of people behind them. They could conceivably fix that with a different kind of ID tech I suppose.

But they just put too many people into their parks to keep them apart. The way they do waiting lines also is a germ spreading disaster. Thousands of people in a cramped space winding back and forth all touching the same handrails. There has been some talk of using electronic ticketing to schedule times for people to show up. But they already do that to set appointments to wait in line. The last time I was there, the appointments were already full for some attractions before the place even opened. Even then, you have to wait in a crowded line.

In order to make it work with social distancing, I am guessing you might be able to accommodate 1/3 of the people. Maybe half with a lot of changes but no where near the crowds they used to do. Even then, it will be a crap shoot.

[Pluvious]

9. Very insightful and astute observations

Thank you for sharing.

It's so odd to see the stock market roaring along, while so much of America is hunkered down.

Netflix, Apple and Amazon doing so well isn't surprising, but others make no sense.

Our government taking on trillions of new debt is really loading up a massive burden on the future.

The fact we're saddled with a corrupt and inept leadership only exasperates the severity of our problems. The fact almost half our population is being held spellbound under the influenful of malicious corporate media, inane religious wackiness, and other purveyors of ignorance, means we're not gonna suddenly wise up and work together for rebuilding our future anytime soon.

How do we dig ourselves back to Greatness ?

[Scarsdale]

12. How? Well, first

VOTE Democratic from top to bottom of the ticket. Get the Greedy Old Perverts OUT of positions of power. Cut taxes for the wealthiest among us. Have the tRump crime family investigated, and pay back all the money they have screwed taxpayers out of. It will take YEARS, but with honest, competent people at the helm, it can be done. People everyone can trust, people of their word. There are no people like that in the gop. Also, get rid of Barr. I am not so confident that the Supreme Court IS "supreme". Roberts slips and his partisanship keeps showing.

[Pluvious]

13. Sounds like a good start, Scarsdale, thanks. n/t

[Wuddles440]

14. I trust that you...

meant to write "increase taxes for the wealthiest among us", but your other observations are spot on!

[Scarsdale]

15. Oops! Yes

I meant "increase taxes" Some wealthy people would agree with that. Remember Bill Clinton spoke up, saying he did not need a tax break? There ARE other millionaires who would be willing to do likewise.

[Lock him up.]

4. They can open all they want and spread the virus at large...

Doesn't mean customers will show up en masse… or enough to make enough profits to stay open...

[pwb]

5. I will participate much less in the economy

Because of my age.

[PatrickforO]

6. LOL. A 'snapback recovery?' Is that like a wedgie, I wonder? n/t

[bucolic_frolic]

10. Few businesses will open until they see success of others

and success of others depends on consumer safety in public. No sane business would open for 40% of former traffic.

[ChoosenWisely]

16. If people dont feel safe then

they wont venture out into public. Our golf courses are open in Michigan yet most of the seniors (people over 65) have
said that they'll wait until they perceive its safe to go out before rejoining the golf league.

Remember, personal spending by the consumer accounts for 60-70% of our GDP.

I expect a small upturn in business, then a long slow recovery. Taxes will need to go up because all the corporate bailouts added a few trillion $$ to the budget deficit.

Who do you think should pay for the corporate bailouts?

[AtheistCrusader]

18. Well, the Trump Administration has been wrong about everything else, so why would they

be wrong about this?