Coronavirus and Politicians vs. the Economy

Chris EdwardsThe American economy is closing down rapidly from both voluntary and mandatory business closings. It is not just restaurants, but also manufacturing, construction, recreation, travel, and many other industries that are shuttering operations.If this continues, there will be a  massive plunge in incomes, and tens of millions of people will not be able to meet basic expenses such as rent and food. Policymakers are acting quickly to slow the virus spread, but I fear they are shuttering too much of the economy because we face a months‐​long health crisis, not a weeks ‐​long crisis. The government does not have enough money to keep the economy afloatuntil a  vaccine arrives, maybe a  year from now.To get a  sense of the massive economic shrinkage possible, the data belowfrom BLS shows U.S. employment data in private ‐​sector industries. I left out the nation’s 23 million government workers because they will likely continue to be paid.The nation ’s 130 million private‐​sector workers would have generated $16 trillion of income this year (Table 6.1D). With massive business closings, how much of that will be lost? The health part of the largest sector, health care and education, will of course remain open during the crisis. But other large sectors —such as leisure and hospitality, retail, manufacturing, and construction—are mainly closing down.Consider a  scenario where half of private‐​sector workers are idled for three months. That w...
Source: Cato-at-liberty - Category: American Health Authors: Source Type: blogs