Where are the models describing the coronavirus' economic costs?

As far as I know, there are none. And as far as the economy goes, we don't need one.

Unlike the iffy epidemiological models that try to predict the future, no model is required to see the catastrophic effects of the shutdown that are already here.

The devastating consequences of the economic shutdown is spreading around America and the world like a coronavirus contagion.  Perhaps even faster.

The economy is collapsing all around us. Livelihoods are getting crushed. Big corporations are in or heading for bankruptcy. Small and family owned businesses are shutting down, having been for generations the source of funds for education and other avenues into the middle class.

And while we're in completely unchartered public healthterritory, the horrible economic impacts are ever so obvious. For the first time possibly since the Great Depression, the scourge of deflation is closing in.

Here are some explanations:

The last article describes what the impact of applying the "look out below" impact of falling prices. While falling prices seemingly are good news for consumers, they portend Great Depression-like times ahead.

With many national economies all but shutting down in an effort to contain the coronavirus, prices on everything from oil and copper to hotel rooms and restaurant take-out are tumbling....

That’s worrying because it could lengthen what may be the deepest recession since the Great Depression. Ebbing pricing power makes it harder for companies that piled on debt in the good times to meet their obligations. This could prompt them to make additional cuts in payrolls and investment or even default on their debts and go bankrupt.

Here's something that has never happened before: The price of crude oil has dropped so far that some producers couldn't give it away. On Monday, West Texas Intermediate, a key U.S. oil benchmark, fell to a negative $37.63 a barrel--meaning you had to pay that amount to someone to take it off your hands. 

While left wing politicians and commentators might welcome the big, bad oil industries' disastrous problems, they ignore the millions of people who work for oil producers, petroleum refiners, downstream producers of finished products, transportation workers and truck drivers, accountants and clerk, janitors and landscapers, and the many, many more who depend on the industry to put food on the table.

The ease with which the left wing waves away the troubled lives of these people is a revelation: They care more about "their side" than the lives of desperate people.

Each day, the enforced shutdown of the economy sinks us deeper and deeper into a real economic depression (not to mention the uncounted cost of emotional depression).

You'd think that the left might be worried that the deeply depressed need for energy would hurt the clean energy industry and the fight against global warming. Oh, no. They're worried that after we get over this, we might go back to our profligate ways.

Bankruptcies--real and expected--abound, from the high end Neiman and Marcus stores to gym chain 24 Hour Fitness. It could be the last straw for many brick and mortar retailers, already in shock from consumers switching to on-line shopping. Supply chains for service and other industries are shutting down because no one needs their products anymore. Not long ago, trucking companies were searching for drivers because of the increased demand prompted by the hot economy; now they're being let go. Airlines, cruise companies and vacation destinations are losing billions, desperately digging ever deeper into reserves that soon will run out.

Gross domestic product--a measure of the economy's health--is expected to plunge. As is the stock market--the vehicle for so many individuals who don't have a defined benefit retirement plan.

Government workers might think that their jobs are protected (because their layoffs are fewer than private industry's), but revenues sources--from income taxes, property taxes, sales taxes and more--are taking their own hit. Sooner or later, the impact will be inevitable.

A depression would hit the poorest hardest, depriving them of jobs and cutting holes in their safety nets. Poverty can be fatal.

Here I am again, revisiting the question of whether the economic destruction will be worse than the coronavirus threat to our health. The way it's shaping up? Opening up the economy is becoming ever more imperative. And soon

dennis@dennisbyrne.net

www.dennisbyrne.net 

My historical novel: Madness: The War of 1812

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  • Aren't economists creating models all the time? They certainly use data to project future outcomes.

    Dennis, I seem to recall that you insisted that politics not be part of the campaign against Covid-19. Yet your post is dripping with political animus. Why? Yes, the economic consequences of any policy is not irrelevant, especially when we have a pandemic to contend with. That's why we need wise and strong leaders to navigate us through the dangerous currents.

    Unfortunately, we have Donald Trump.

  • In reply to Aquinas wired:

    I arrive at my position because of its merits. If it happens at times to coincide with the position of someone you dislike, so be it. I started with what I believe, not whose line I ought to support.

  • In reply to Dennis Byrne:

    I respect your position. It has merit. What I'm bothered about is gratuitous attack of the political left:
    "The ease with which the left wing waves away the troubled lives of these people is a revelation: They care more about "their side" than the lives of desperate people."

    Do you actually believe your opposition party, the party of FDR, of Medicare and Social Security, of Civil Rights and the working man and woman, is so callous?

    We are all in this together and it doesn't serve our nation to deal in false generalities.

  • In reply to Aquinas wired:

    Clearly that doesn't include you or the friends and relatives I have who are liberals. The leadership, however, is another story. I draw my (admittedly) stereotypes from the policies they are pushing that victimize the very people they claim to be helping.

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