Moody’s Analytics economist Mark Zandi warns that the U.S. is risking a second coronavirus wave and an economic depression by reopening businesses too quickly.
“If we get a second wave, it will be a depression,” the firm’s chief economist told CNBC.
“We may not shut down again, but certainly it will scare people and spook people and weigh on the economy,” he said.
Zandi defined a depression as 12 months or more of double digit unemployment.
“The market is casting a pretty high probability of a V-shaped shaped recovery,” said Zandi. “The horizon may be a little short term: Next month, the month after, the month after that.”
Zandi predicts jobs will start to rebound by Memorial Day weekend as businesses reopen. If there’s no second wave, he estimates the gains will flow through the summer into early fall, CNBC explained.
“After that, I think we’re going to be in quicksand because of the uncertainty around the virus and the impact that it’s going to have on consumers and businesses,” he added.
Meanwhile, the White House has begun informal talks with Republicans and Democrats in Congress about what to include in another round of coronavirus relief legislation, officials said on Sunday, while predicting further U.S. jobs losses in the coming months.
Officials in President Donald Trump's administration, including Treasury Secretary Steven Mnuchin and White House economic adviser Larry Kudlow, said they were holding discussions with lawmakers on issues including potential aid to states whose finances have been devastated by the pandemic, Reuters reported.
While Democrats, who control the House of Representatives, are moving to unveil new legislation as early as this week, the White House signaled it is in no hurry to pass another relief bill.
Since early March, Congress has passed bills allocating $3 trillion to combat the pandemic, including taxpayer money for individuals and companies to blunt an economic impact that includes an unemployment rate to 14.7% in April after U.S. job losses unseen since the Great Depression of the 1930s.
"We just want to make sure that before we jump back in and spend another few trillion of taxpayers' money that we do it carefully," Mnuchin said. "We've been very clear that we're not going to do things just to bail out states that were poorly managed."
Pressure for further action may mount as the near-term economic picture worsens.
Despite being critical of how long the U.S. remained in lockdown amid the coronavirus, former Trump campaign economic adviser Stephen Moore is confident in a fall recovery.
"It will be a slow process," Moore told "The Cats Roundtable" on 970 AM-N.Y., per The Hill, "but you've got to get going.
"I do believe that by the end of the summer we're going to see a very swift kind of recovery for the fall."
Moore laments the progressively slow return to business, particularly in the bigger-budget blue states, is setting up a "tough summer," due to lingering coronavirus infection fears.
"Customers are still a little bit afraid to go outside," Moore told host John Catsimatidis. "People are nervous. They're worried about their health. Every day you see more and more people venturing out. You see more and more people getting on the job.
"It's going to be a tough summer . . . as we try to get our feet back on the ground, but I believe that by the end of the summer we could start to see a real recovery."
Moore is an economic adviser on the White House coronavirus task force, helping the administration get the economy rolling again safely.
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