In 1930, President Herbert Hoover told the nation, “the worst is behind.” The Great Depression lasted another eight years.
Economists think the worst damage of the 2020 coronavirus recession has already occurred. But we’re nowhere near the end. President Trump insisted this week that “we are not closing our country” again if the virus resurges. And his economic advisers are predicting a swift economic recovery. But the next phase of the coronavirus response may be a long muddle in which things don’t get a lot worse, but it doesn’t feel like an awful downturn is getting much better, either.
More than 2.4 million Americans filed unemployment claims this week, down from 2.7 million the week before. The number of weekly unemployment insurance claims has been falling since late March. Yet we’ve lost 39 million jobs since business closures began two months ago, and the number of unemployment claims this week was 12 times higher than before the virus arrived. So things are getting worse at a decelerating rate. This is what accounts for “better” at the moment.
There is still no national coronavirus testing and tracing plan—the one, single thing experts say could speed an economic recovery the most—and Trump continues to show no interest. Instead, he’s been extolling hydroxychloroquine, a discredited treatment for the virus that he prescribed for himself anyway. “I’m still here,” he assured reporters on May 19, when he revealed he’s taking the pills.
If there was any reassuring news this week, it might be that Trump joined most of the rest of America in donning a mask, while touring a Ford plant in Michigan. But he tried to evade cameras while doing it, lest he appear responsible and weak. Somehow, a picture leaked out, taken, apparently, by somebody other than the media photographers who were quarantined elsewhere at the plant.
A reluctantly masked Trump might just symbolize the whole nation’s capitulation to the coronavirus. This week’s Trump-o-meter reads FAILING, the second-lowest score, because there’s still no testing plan and the economic recovery is going to be a long, infuriating slog.
The stock market is far more upbeat than the Trump-o-meter, with the S&P 500 ending the week up about 2.5%. Investors have priced in a lot of bad economic news and are watching instead for a return of spending as nearly every state loosens stay-home restrictions, and drugmakers report progress toward a coronavirus vaccine. Many are puzzled by a stock market that has surged 32% since late March, as carnage in the job market has multiplied. Federal Reserve stimulus has a lot to do with it.
But if stocks are rising on hopes of a quick economic revival as states reopen, there will be a reckoning. Consumers are barely venturing out, even in states with the most lenient restrictions. Many people simply don’t feel safe. And new research from two University of California professors forecasts a very small economic rebound as states reopen, as long as the virus is prevalent. The country may not close again, but it will be a long time till it’s open.
Rick Newman is the author of four books, including “Rebounders: How Winners Pivot from Setback to Success.” Follow him on Twitter: @rickjnewman. Confidential tip line: email@example.com. Encrypted communication available. Click here to get Rick’s stories by email.