Got me. Not a scooby what the correct response is here.
I think that governments are screwing the pooch in their response but then I always think that. Being more specific though, paying wages? Business support? VAT holidays? Dunno.
My general thoughts are, yes, horrible recession. And also a short one. Current financial market economists are talking about 15% off GDP for a quarter. And 1.5% off for the year. So, that’s a horrible, very deep and also very short recession. From what we can see in statistics from China they’re already climbing back. Orders are coming in to replace commodity stocks for example. Firms are reopening, people are back at work.
Yes, deep, deep, cut in output and therefore also in incomes. But something to think about. This happens often. The economy comes to a shuddering halt every Sunday for example. Yes, I know, different, but still a point to consider. It’s not how deep a production closedown is, it’s how long it lasts.
One more thing. Recessions that happen because of something we know about lead to much faster recovery growth than when we’re all standing around without that scooby. Because we know what the cause is, once it’s stopped happening then we resume not quite but almost where we were. There’s not the discovery period twatting about trying to work out what went wrong. There’s also not the reorganisation period trying to solve it.
Thus, short, sharp recession with steep recovery.
At which point you can argue either way. Let it happen and carry on. Or given that it’s going to be short why not pay everyone’s wages etc? I don’t really have a view on this.