Paul Krugman says he did the math – and the risk that Trump and McConnell pose for the economy is ‘terrible’ – Alternet.org

Quite a student of New Deal’s economics, New York Times columnist Paul Krugman has often argued that helping the unemployed in an economic downturn not only helps the unemployed – it also benefits the economy as a whole. . Krugman made that point several times during the Great Recession, and in a column published this week, the liberal economist warns that the “2020 coronavirus recession” will get even worse if unemployed Americans do not get the help they need. are needed.

“I’m not sure how many people realize just how deep the 2020 coronavirus recession could have been,” Krugman explains. ‘Of course it was terrible: employment fell, and real GDP fell by about 10%. Almost all of this, however, reflected the immediate effects of the pandemic, which forced many of the economy to lockdown. What the net happen was a major second round of job loss driven by the decline in consumer demand. Millions of workers lost their regular income; without federal help, they would be forced to cut spending, causing millions more to lose their jobs. ‘

But with that federal help that has expired, Krugman adds, the “shrinkage of the coronavirus” could deepen and go from bad to worse.

“The suffering of underprivileged families will be unbearable, but there will also be widespread damage to the economy as a whole,” warns Krugman. “How big will this damage be? I did the math, and it’s awful. ‘

The Economist goes on to say, ‘Unlike wealthy Americans, most low-wage workers whose benefits have just ended cannot be blunted by spending on savings or borrowing against assets. That, their expenses will fall by a lot. Evidence of the initial effects of emergency aid suggests that the end of the benefits will reduce total consumer spending – the main driver of the economy – by more than 4% … The expiration of emergency aid could fall from 4% to 5% in GDP production.

Better job report than expected, but: not really seeing the hole we are in, some screwed up issues related to seasonal adjustment, and it’s a snapshot of July 12 or so, before most of it closes. This is not the V you’re looking for.

– Paul Krugman (@paulkrugman) August 7, 2020

According to Krugman, the coronavirus pandemic reduced GDP by “around 10%” in the US – and without help for the unemployed, it will fall even more.

“What we’re looking at now could be another shock, a kind of economic second wave, almost monetaryly just as bad as the first,” Krugman claims. “And unlike the pandemic, this shock will be entirely self-generated, brought on by the fecklessness of President Trump and – let’s give credit where it comes from – Mitch McConnell, the leader of the Senate majority.”

Sorry, but I take the adopted blankets of deficiencies seriously unless they are willing to give up something they want. If they are okay with tax cuts but helping the unemployed, then they are fraud https://t.co/FsHY3Qwl1M

– Paul Krugman (@paulkrugman) August 7, 2020

Krugman concludes his column by warning that as painful as the Great Recession was, the “coronavirus recession” could inflict more long-term damage to the U.S. economy.

“Not having learned from the recent crisis seems to be almost a requirement for Republican economic advisers,” Krugman complains. “That seems like at the moment we are heading towards a Greater Recession – a worse decline than 2007-2009, overloaded on the decline of the coronavirus.”