Ask HN: How bad will the 2020 economic crisis be?

Well the stock market is now down below what it was when Trump took office, so we've already lost 3 years worth of gains in one month, which is pretty poor.

Goldman put out a note saying the GDP would dip about 9-10.5% over the first quarter of the year, which is almost the worst we've ever seen. And that's a single quarter, a single quarter. US GDP maybe down 20% by the time this is over.

And keep in mind no doctor that I've talked to thinks this will be over any time before mid 2021.

And probably the worst news is that this is the type of drop that won't be V shaped, for all the talk of 2008, atleast it went down and then went right back up.

Most recession affect a specific geographical area or market sector, This pandemic affects the entire world at the same time, which hasn't really happened since the 1970's gas shortages.

The recovery here will not be V shaped, it will take years and years to recover. People have spent their savings just to survive, governments are delaying tax payments and throwing money at the problem.

This recession/depression will be with us for years to to come and will be the worst thing that anyone alive can remember.

Can anyone make the case that the recovery will be quick? Because I haven't seen anyone make that case yet in a believable way.

There are some trends since the seventies: higher productivity per employee and for marginal groups more and more difficulties to get a job. The pandemic economic crisis accelerates these trends.

Let's have a look at company A and company B. Company A employs many people and is not able to offer remote work. Company B doesn't employ many people and can offer remote work. If these companies compete it is clear that company B will grow during the crisis, and company A won't.

In other words, we have structure change bombed upon us.

CEOs and owners say, let's see, a pandemic and suddenly labor disappears. How can we mitigate such problems in the future?

My hunch is that after the crisis is contained economy returns, however it will be even more difficult for people to have a job than before. If the state doesn't help the people, economy will stay depressed because people are laid off and just don't have the money to buy things.

Edit: many little improvements.

My view is that this isn’t an underlying financial crisis. However, of course the temporary disruptions will be of such magnitude that they will create one. Worst case IMHO is that it could be way worse than the Great Depression due to the very tight coupling, high leverage, high overhead and JIT nature of the global economy today. There will be a huge cascading failure effect.

That said, interventions can have a huge impact on the extent of that. Interventions that delay/defer/mitigate economic damage at the entity and individual levels I think can do the most to simply “pause” the economy and prevent underlying degradation while we deal w the pandemic.

Imagine the benefit of just all debt being rolled over month-by-month to the end of the loan term, and similar for renters. Defer irreversible economic decisions and go into subsistence mode. I think that will be the best best for the maximal eventual recovery. That will be the difference in a return to prior levels taking 6-12 mo vs 5-10 years.

Sadly I don’t think the US is heading in this policy direction. I half wonder if we should just do it grassroots and then there will be ample support to reimburse it via tax or other incentive.

That’s how I am thinking about it anyway.

I think it will fundamentally reshape a few aspects of life - and not all is bad.

Needless, gratuitous (business and other) travel for one - which in turn will lead to much better housing prospects for young people. Treating a house as investment was the most damaging trend of the last two decades.

The loss of accumulated wealth also reduces inequalities.

Wasteful practices will be affected more in all walks of life.

Reducing the carbon footprint is also a massive benefit. We will reduce that more than by any other measure we would have taken.

That was after the Chinese government started blaming the virus on the Americans to save face.