Heather Long writes about the $2 trillion coronavirus rescue bill:
The good news is the majority of the money is going to laid-off workers, small business owners, hospitals and state and local governments. The bad news is it won’t be enough to stop a recession. And it’s an open question whether the nation can avoid an economic depression, the likes of which haven’t been seen since the 1930s.
I continue to be a little perplexed about this. Is it really a recession if it’s caused by the government stepping in and literally ordering businesses to reduce their output? Technically, I suppose so. GDP goes down, employment goes down, and consumption goes down. Those are all the markers of a recession.
And yet . . . help me out here. It’s not the same thing, is it? Or am I missing something? It almost seems as if there ought to be another name for a deliberately engineered economic slowdown like this one that will end just as soon as the government orders it to end. Take this, for example:
Bubble Watch: Coronavirus slashes commercial property values 24% – Orange County Register https://t.co/n77mYW5khK
— Nick Walker (@nw3) March 25, 2020
It’s apparently true that real estate investors are in panic mode right now, but it’s not so much because the value of real estate has truly plummeted; it’s only because deals are frozen due to government lockdown orders.¹ Nobody wants to buy while the coronavirus lockdown is in effect, which means that technically markets are in freefall. This is bad news for those who are unlucky and have to sell right now, but for most real estate owners it doesn’t mean anything much at all. There might be some footnotes that have to be added to their balance sheets, but they’re temporary and affect nothing. They just have to ride it out for a few months. In a real recession, you’d be afraid that your holdings have lost value forever.²
So what do we call this? A fauxcession? A coronacession? A pandemicession? Any ideas?
¹There are probably exceptions, of course. For example, the chart suggests that the value of senior housing is down the most, which makes sense. It’s all a bit ghoulish, but if the coronavirus ends up killing a lot of the elderly, then there will be less demand for senior housing and its value will decline.
On the other hand, why would anyone think that student housing is down 30 percent in any real sense of the word? When the pandemic ends, there are going to be just as many students as there were before.
²Or, to be more accurate, for an indeterminate but longish time.