Posted on 04/02/2020 11:00:44 AM PDT by USA Conservative
If this government-ordered shutdown continues for much more than another week or two, the human cost of job losses and bankruptcies will exceed what most Americans imagine. This won’t be popular to read in some quarters, but federal and state officials need to start adjusting their anti-virus strategy now to avoid an economic recession that will dwarf the harm from 2008-2009.
Much of the world economy has shuddered to a halt. In the United States alone, a record 3.3 million people filed for unemployment benefits in late March. President Donald Trump once mused about lifting pandemic restrictions by mid-April to prevent more economic damage, but ultimately settled on extending federal advice to maintain physical distancing through the end of April.
Trump’s decision, however, has only put off the question of when, exactly, cities and states should begin to ease up on distancing orders. “If you keep the shutdown going for 2 months more than we need to, that’s just an unbelievably costly mistake.
Grassfire put together their estimate for the costs of the shutdowns related to the coronavirus and the amount is staggering:
1. Loss of Stock Market Valuation
At the end of February, reports indicated the stock market lost $6 trillion in valuation based on a drop of the Dow Jones Average from a high of 29,551 to 25,429 in the first wave of coronavirus crisis slides. Until we find a site that states the total loss due to the coronavirus crisis, based on the $6 trillion slide, we are estimating the total loss as of 3/31 (with the Dow at 18,591) to be:
Stock market loss in valuation: $10.5 TRILLION
1. Loss of Stock Market Valuation
At the end of February, reports indicated the stock market lost $6 trillion in valuation based on a drop of the Dow Jones Average from a high of 29,551 to 25,429 in the first wave of coronavirus crisis slides. Until we find a site that states the total loss due to the coronavirus crisis, based on the $6 trillion slide, we are estimating the total loss as of 3/31 (with the Dow at 18,591) to be:
Stock market loss in valuation: $10.5 TRILLION
2. Direct Losses to the Economy (Lower GDP) On March 20, Goldman Sachs drastically lowered its U.S. economic projections and is now expecting that that U.S. GDP will contract by 3.8% this year, as opposed to the projection at the outset of the year of 2% growth. It took America about three years to get back to the level of GDP output after the 2008-2009 recession. Based on this data, we project the LOSS in GDP due to the coronavirus crisis:
Direct Losses to U.S. Economy (GDP) $2.39 TRILLION
3. Loss of Jobs/Wages
The U.S. Federal Reserve of St. Louis is projecting the possibility of up to 47 million lost jobs (32.1% unemployment), which is far greater than the Great Depression (24.9% unemployment)
But what’s the cost? One study after the 2008-2009 recession found that losing your job during that recession cost the person $112,000 over the next 25 years. In today’s dollars, that’s $135,000. Using this estimate, that means the COVID-19 economic shutdown cost U.S. workers: Losses in wages to unemployed workers: $5.264 TRILLION
4. More deficit in government spending
All the emergency stimulus efforts of Congress are simply adding to the piles and piles of debt. So the added debt is a real cost that someone will have to pay. At some point, we will pay in a devaluation of our dollars. In the long run, we’re saddling our children and grandchildren with an impossible debt burden.
And what is the U.S. cost? One estimate says the global spending bill from coronavirus will be $10 trillion. Here’s what we know about the cost of the U.S. coronavirus spending bills:
Phase One: A paltry $8.3 billion Phase Two: No one knows; one estimate is $100 billion (also called “chump change” in D.C.). Phase Three: Not yet passed, but the original number of $1 trillion was mocked so the Senate went for $2 trillion, and the House just upped the ante to $2.2 trillion But wait… the Phase Three stimulus actually created an additional $4.5 trillion in borrowing through a “helicopter credit drop” (a manipulation to give the govt. more borrowing power). Which gives us a total of $6.81 trillion, so far. (Phase Four is coming.)
But wait! Since we will never pay that money back (the deficit only grows), let’s add in 30 years of interest, at say 2.5%, and we get a grand total of:
The total cost of new deficit spending: $14.28 TRILLION (and counting)
Total equals …. $32.434 TRILLION
That’s more than the entire annual GDP of the U.S.
The link between unemployment and suicides will be a concern that has to be addressed while the majority of the population stays-in to duck the coronavirus pandemic Public health experts broadly agree that more suicides happen in recessions. Even a pandemic can’t shock the media out of its blinding hostility to President Trump — witness this week’s absurd press eruption after he warned of a likely rise in suicides.
“People get tremendous anxiety and depression, and you have suicides over things like this when you have terrible economies,” Trump noted at a briefing, adding that he believes the isolation many Americans face thanks to social distancing will also lead to more mental health issues.
There’s nothing incorrect — or even controversial — in those remarks. But media outlets that would normally echo any concern about higher mental-health risks proceed to be outraged.
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What really steams is there has been no effort made to find ways for small businesses to stay open during this. With a little caution and creativity many closed businesses could be opened if the effort was made. Instead the Governors took a meat axe to the problem leaving thousands of small businesses in the wreckage.
These academics don’t understand this nation is walking a tightrope of either a medical system collapse or an economic catastrophe. A course must be charted that gives equal consideration to both.
I see a future of increased suicides, broken families, murders and assualts and robberies.....
the vulnerable should have been isolated, not the entire country.....
would have been better to tell everyone to wear a mask than to tell everyone they had to be poverty stricken....
ironic if the ones pushing the siege are the ones left without a hospital to go to when they have a mva or heart attack, and die from that....
I can understand fear of the virus....I'm in a bad risk group...but people can practice self isolation and good hygiene habits and be fine....
Bill the Chicoms.
You laugh?
Discount their Treasury bills.
5.56mm
Our debt to the Communists should be marked “paid in full” to cover this.
“...people like (sic) have become a minority...”
Ain’t that the hard truth? Preach it, Brother.
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