Skyrocketing unemployment and a plunging stock market have stoked fears that the US—and the world—may be heading into a coronavirus-fueled recession. But economist Dr. Marci Rossell says there are some key differences between this financial crisis and previous recessions, which could indicate quicker financial recovery.
The former chief economist for CNBC shared her insight about the effect of the COVID-19 pandemic on the economy during a Haworth Connect virtual presentation.
“What's so unprecedented about this situation is the job loss is almost immediate,” said Dr. Rossell.
She went on to explain that, typically, job loss is the last thing to happen in an economic downturn because it tends to be a lagging economic indicator. This time, a significant portion of the unemployment is tied to restrictions designed to curb the spread of the novel coronavirus, which causes the sometimes deadly COVID-19.
The rush by Congress to approve a series of stimulus packages shows the lessons learned from the 2008 Great Recession about the importance of moving quickly within their power to mitigate the income losses and to turn on the monetary spigots.
“I will applaud governments worldwide for seeming to really take that lesson to heart and step in and do that. It suggests that we might have an easier recovery ahead of us, because there hasn't been the same debate there was in 2008,” Dr. Rossell said.
Recovery took four years during the Great Recession because there was an enormous transition globally, through massive foreclosure processes and changes to the way banks were regulated around housing, and a significant shift in the financial markets.
“In 2008, where there was a legitimate reorientation of the economy, where too many resources had been poured into residential real estate, the economy took years to adjust to that new reality,” Dr. Rossell explained.
Dr. Marci Rossell