As you would expect from a group of used car salesmen, Trump and his economic advisers are predicting that the economy will come roaring back in the next few quarters. According to Politico, one former Obama economic adviser thinks they’re right. Are they?
In my opinion, no, although conditions are likely to be improving, simply because they can’t get much worse. The lack of a viable plan for the control of the virus will reduce consumer confidence for the foreseeable future, as I’ve noted many times before. Publicity given to a wave of bankruptcies will impact confidence, too. GOP-driven austerity measures, particularly relating to unemployment insurance and state and local governments, won’t help. The possible escalation of the trade war with China for domestic political reasons could rattle the markets. Finally, we are going to see some serious debt crises among the emerging countries, particularly in Latin America, and tourism and exports will continue to be crippled by the virus.
I just don’t see how a V-shaped recovery is reasonably possible under these circumstances. It will be something between a V and a U. Whether the electorate will view that as a glass half full or half empty remains to be seen.