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There’s No Way to Sugarcoat It; The Economic Recovery Will Be ‘Brutal’

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There’s No Way to Sugarcoat It. The Economic Recovery Will Be ‘Brutal’

Both a prominent economist and a billionaire say the economic slowdown will be “brutal” for our country. One believes it will be worse than the Great Recession and that recovery will take time.

“This is a brutal recession. This recession is extraordinarily deep. Already, you’ve got 22 million people filing for jobless claims compared to 8.7 million jobs lost during the Great Recession,” said Lakshman Achuthan, co-founder of the Economic Cycle Research Institute.

During an appearance on CNBC yesterday Achuthan also shared his diagram to measure how bad the recession will get using his three D’s: Depth, diffusion and duration.

“The diffusion of weakness across the economy… spreads like wildfire,” he said. “This recession is certainly very severe. It’s affecting pretty much all industries.”

Achuthan was waiting to see how far commodity prices would fall, which he uses to measure depth.

“They have now fallen to the lowest readings since late 2015, and they haven’t found bottom yet.” he added.

Anything Positive?

If there’s any good news in Achuthan’s diagram, it’s the final D: Duration. He believes the country could see a quick initial recovery once the government lifts the quarantine.

“This recession could end up being among the shortest on record,” he said. “Just a partial re-opening of the economy would lift activity off the extreme lows.”

But he does warn that a full recovery will take time.

“It’ll be a long time. It won’t be anytime soon that we will be getting back to a more typical economic growth outlook,” Achuthan said.

Billionaire Mark Cuban, owner of the Dallas Mavericks NBA team, agrees that a full recovery will take time. He also believes that it won’t be easy.

“It’s going to be brutal. There’s no way to sugarcoat it at all.” Cuban said during an appearance on Fox Business yesterday.

Cuban said he doesn’t expect the country to return to normal for two to three years. He even expects it will take a third round of loans to keep small businesses operating in the months ahead.

Course of Action

Cuban, who is on President Trump’s economic advisory council, says he’ll be smarter the third time about including language that prohibits large corporations or endowments from being eligible for the loans.

He warns that for many small businesses, it may simply be too expensive to reopen even when given the green light. They will have the burden of increased cleaning costs due to sanitation and sterilization needs at a time that revenues will be slow to rebound.

He’s particularly worried about businesses with more than 500 employees, as they are currently unable to qualify for any of the Payment Protection Program loans.

“We haven’t talked about those companies that are 501 and up. They are suffering the most.” Cuban added.

Today, the House votes on the $500 billion aid package that the Senate approved earlier in the week. The package includes $320 billion more for the Paycheck Protection Program to help small businesses after the original $350 billion ran out last week.

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