Post by the Scribe on May 19, 2020 1:35:04 GMT
Larry Summers: Pandemic marks a 'fairly profound structural change' in economy
www.yahoo.com/finance/news/larry-summers-pandemic-marks-a-fairly-profound-structural-change-in-economy-132446609.html
Akiko Fujita Anchor/Reporter
Yahoo FinanceMay 18, 2020, 6:24 AM MST
States may be easing social distancing measures to spur business activity halted by the pandemic, but Former Clinton Treasury Secretary Larry Summers says the economy Americans return to will be significantly different than the one before the closures.
Speaking to Yahoo Finance, Summers, who also served as the Director of the National Economic Council under President Obama, said the record downturn experienced over a two month period, will have lasting effects on the economy, even after a vaccine is developed
“I think [the pandemic] is going to mark a fairly profound structural change,” Summers said. “We’re going to have very substantial increases in inequality, and a very substantial reduction in any sense of solidarity in our society, unless the government steps up and meets this challenge.”
Nationwide stay-at-home measures have already led to record declines in economic activity.
Retail sales plummeted a record 16% in April, while GDP contracted 4.8% in the first quarter. More than 36 million Americans have filed unemployment insurance claims, overwhelming local government agencies.
www.yahoo.com/finance/news/coroanvirus-covid-april-2020-retail-sales-165105238.html
www.yahoo.com/finance/news/gdp-1q-2020-us-economic-activity-coronavirus-pandemic-155756514.html
www.yahoo.com/finance/news/coronavirus-covid-weekly-initial-jobless-claims-may-9-155532542.html
NEW YORK, NY - MAY 24: Former Treasury Secretary & White House Economic Advisor Larry Summers is interviewed by FOX Business' Maria Bartiromo at FOX Studios on May 24, 2017 in New York City. (Photo by Robin Marchant/Getty Images)
‘We still have not hit bottom’
Summers said more pain will likely follow, especially when it comes to the labor market, saying “in general, unemployment goes up the escalator and goes down the staircase.”
“My guess is that we still have not hit bottom, that there will be a range of knock on effects from the disruptions that have taken place that are likely to be significant relative to the effects of people coming back,” Summers said. “I'm pretty concerned about the economic outlook, not just for the next few months, but for the next few years.”
Congress has approved nearly $3 trillion in emergency relief to combat the downturn, while delaying tax deadlines for businesses and individuals. But with the Senate unlikely to approve the House’s $3 trillion bill targeting additional stimulus, there are growing concerns that politics will delay help to those who need it most. Unemployment benefits are set to expire in July.
“I think we need to inject much more money into the economy, and we need to find ways of injecting it that reward working, rather than reward not working,” said Summers, discussing the potential of extending unemployment benefits. “I do worry about social insurance measures that provide people an incentive not to work. I think that is a legitimate concern. But I worry much more about not providing enough funding and not providing enough demand in the economy, which I think is potentially a more serious problem.”
Labor market unlikely to recover ‘with any rapidity’
The downturn has hit the most vulnerable communities the hardest. A recent Federal Reserve survey found that nearly 40% of people living in households earning $40,000 or less lost jobs, while just 13% of those making more than $100,000 were cut. In a “60 Minutes” interview Sunday, Federal Reserve Chairman Jerome Powell said workers getting hurt the worst are the most recently hired, especially women.
www.yahoo.com/finance/news/federal-reserve-nearly-40-of-households-making-under-40-k-have-lost-their-jobs-173613010.html
Summers said additional workers are likely to be squeezed out of the labor force permanently, if the government doesn’t act quickly enough.
“Surely there will be people who are in their early 60s who will plan on taking an earlier retirement than they had otherwise planned on. There will no doubt be people coming out of high school who get off on the wrong road, and maybe for a long time, if ever before they find their way back to regular, stable work,” he said. “I don't think that this is going to be a thing we're going to move through with any rapidity.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @akikofujita
China puts global economic recovery into 'radically different terrain:' Former Prime Minister of Australia
www.yahoo.com/finance/news/china-puts-global-economic-recovery-into-radically-different-terrain-former-prime-minister-of-australia-193823224.html
Seattle Mayor considers reopening economy ‘sector by sector’
www.yahoo.com/finance/news/seattle-mayor-considers-reopening-economy-sector-by-sector-141447486.html
‘Once-in-a-century disruption’ reverberates across global supply chains
www.yahoo.com/finance/news/once-in-a-century-disruption-reverberates-across-global-supply-chains-141236269.html
richard 7 hours ago
Larry Summers as treasury secretary under Clinton had a number of policy blunders. The man is arrogant and doesn't listen to well crafted opinions that don't match his. Summers helped midwife a major series of policy errors dating back 20 years that led directly to what many economists now believe was the worst financial crisis ever. In particular, Summers's opponents—he faces a phalanx of opposition among Democrats on the Hill—point to the Commodities Futures Modernization Act of 2000, which effectively deregulated the global market in over-the-counter derivatives and was Summers's signal achievement as Treasury secretary. The final report of the Financial Crisis Inquiry Commission convened by Congress in 2009 puts the government's failure to rein in these derivatives at "the center of the storm." In addition, the man was not a champion for the Glass Steagall Act that if reconstructed would have helped stem the storm of the 2006-2009 crisis created by an unconstrained wallstreet.
Tom 7 hours ago
If 2008 and 9/11 are any indication of what's coming - 50% of the people will jump back in and 50% will hold back until they are comfortable and safe. Restaurants cannot survive on 50% capacity. The travel industry cannot sustain such a hit either. Rest assured, many businesses will permanently reduce travel, as they discovered they can operate with less of it - or none at all. Others will have their employees permanently work from home - reducing the use of fuel, eat-out lunches, etc., for the employee and less office space for the business - and on it goes. Numerous box stores will file bankruptcy due to on-line purchases. Our economy will not be the same folks. The key is to figure out where the demand will be and fill it...
John 9 hours ago
Automation was already on the horizon, and it will now be here very, very soon. Fast food restaurants are already automating processes and robots will possibly replace at least 1/3 if not much more of fast food workers. Self driving trucks will push truck drivers into jobs paying less than half of what they were making. The meat packing plants will definitely be automated in the next few years (as they should be, since they are health hazards now). So that will leave the US (and much of the world) with a very large under-class. So with that, a famous quote has been on my mind a great deal lately... "Education is the best provision for old age" (Aristotle)
www.yahoo.com/finance/news/larry-summers-pandemic-marks-a-fairly-profound-structural-change-in-economy-132446609.html
Akiko Fujita Anchor/Reporter
Yahoo FinanceMay 18, 2020, 6:24 AM MST
States may be easing social distancing measures to spur business activity halted by the pandemic, but Former Clinton Treasury Secretary Larry Summers says the economy Americans return to will be significantly different than the one before the closures.
Speaking to Yahoo Finance, Summers, who also served as the Director of the National Economic Council under President Obama, said the record downturn experienced over a two month period, will have lasting effects on the economy, even after a vaccine is developed
“I think [the pandemic] is going to mark a fairly profound structural change,” Summers said. “We’re going to have very substantial increases in inequality, and a very substantial reduction in any sense of solidarity in our society, unless the government steps up and meets this challenge.”
Nationwide stay-at-home measures have already led to record declines in economic activity.
Retail sales plummeted a record 16% in April, while GDP contracted 4.8% in the first quarter. More than 36 million Americans have filed unemployment insurance claims, overwhelming local government agencies.
www.yahoo.com/finance/news/coroanvirus-covid-april-2020-retail-sales-165105238.html
www.yahoo.com/finance/news/gdp-1q-2020-us-economic-activity-coronavirus-pandemic-155756514.html
www.yahoo.com/finance/news/coronavirus-covid-weekly-initial-jobless-claims-may-9-155532542.html
NEW YORK, NY - MAY 24: Former Treasury Secretary & White House Economic Advisor Larry Summers is interviewed by FOX Business' Maria Bartiromo at FOX Studios on May 24, 2017 in New York City. (Photo by Robin Marchant/Getty Images)
‘We still have not hit bottom’
Summers said more pain will likely follow, especially when it comes to the labor market, saying “in general, unemployment goes up the escalator and goes down the staircase.”
“My guess is that we still have not hit bottom, that there will be a range of knock on effects from the disruptions that have taken place that are likely to be significant relative to the effects of people coming back,” Summers said. “I'm pretty concerned about the economic outlook, not just for the next few months, but for the next few years.”
Congress has approved nearly $3 trillion in emergency relief to combat the downturn, while delaying tax deadlines for businesses and individuals. But with the Senate unlikely to approve the House’s $3 trillion bill targeting additional stimulus, there are growing concerns that politics will delay help to those who need it most. Unemployment benefits are set to expire in July.
“I think we need to inject much more money into the economy, and we need to find ways of injecting it that reward working, rather than reward not working,” said Summers, discussing the potential of extending unemployment benefits. “I do worry about social insurance measures that provide people an incentive not to work. I think that is a legitimate concern. But I worry much more about not providing enough funding and not providing enough demand in the economy, which I think is potentially a more serious problem.”
Labor market unlikely to recover ‘with any rapidity’
The downturn has hit the most vulnerable communities the hardest. A recent Federal Reserve survey found that nearly 40% of people living in households earning $40,000 or less lost jobs, while just 13% of those making more than $100,000 were cut. In a “60 Minutes” interview Sunday, Federal Reserve Chairman Jerome Powell said workers getting hurt the worst are the most recently hired, especially women.
www.yahoo.com/finance/news/federal-reserve-nearly-40-of-households-making-under-40-k-have-lost-their-jobs-173613010.html
Summers said additional workers are likely to be squeezed out of the labor force permanently, if the government doesn’t act quickly enough.
“Surely there will be people who are in their early 60s who will plan on taking an earlier retirement than they had otherwise planned on. There will no doubt be people coming out of high school who get off on the wrong road, and maybe for a long time, if ever before they find their way back to regular, stable work,” he said. “I don't think that this is going to be a thing we're going to move through with any rapidity.”
Akiko Fujita is an anchor and reporter for Yahoo Finance. Follow her on Twitter @akikofujita
China puts global economic recovery into 'radically different terrain:' Former Prime Minister of Australia
www.yahoo.com/finance/news/china-puts-global-economic-recovery-into-radically-different-terrain-former-prime-minister-of-australia-193823224.html
Seattle Mayor considers reopening economy ‘sector by sector’
www.yahoo.com/finance/news/seattle-mayor-considers-reopening-economy-sector-by-sector-141447486.html
‘Once-in-a-century disruption’ reverberates across global supply chains
www.yahoo.com/finance/news/once-in-a-century-disruption-reverberates-across-global-supply-chains-141236269.html
richard 7 hours ago
Larry Summers as treasury secretary under Clinton had a number of policy blunders. The man is arrogant and doesn't listen to well crafted opinions that don't match his. Summers helped midwife a major series of policy errors dating back 20 years that led directly to what many economists now believe was the worst financial crisis ever. In particular, Summers's opponents—he faces a phalanx of opposition among Democrats on the Hill—point to the Commodities Futures Modernization Act of 2000, which effectively deregulated the global market in over-the-counter derivatives and was Summers's signal achievement as Treasury secretary. The final report of the Financial Crisis Inquiry Commission convened by Congress in 2009 puts the government's failure to rein in these derivatives at "the center of the storm." In addition, the man was not a champion for the Glass Steagall Act that if reconstructed would have helped stem the storm of the 2006-2009 crisis created by an unconstrained wallstreet.
Tom 7 hours ago
If 2008 and 9/11 are any indication of what's coming - 50% of the people will jump back in and 50% will hold back until they are comfortable and safe. Restaurants cannot survive on 50% capacity. The travel industry cannot sustain such a hit either. Rest assured, many businesses will permanently reduce travel, as they discovered they can operate with less of it - or none at all. Others will have their employees permanently work from home - reducing the use of fuel, eat-out lunches, etc., for the employee and less office space for the business - and on it goes. Numerous box stores will file bankruptcy due to on-line purchases. Our economy will not be the same folks. The key is to figure out where the demand will be and fill it...
John 9 hours ago
Automation was already on the horizon, and it will now be here very, very soon. Fast food restaurants are already automating processes and robots will possibly replace at least 1/3 if not much more of fast food workers. Self driving trucks will push truck drivers into jobs paying less than half of what they were making. The meat packing plants will definitely be automated in the next few years (as they should be, since they are health hazards now). So that will leave the US (and much of the world) with a very large under-class. So with that, a famous quote has been on my mind a great deal lately... "Education is the best provision for old age" (Aristotle)