Tags: paul krugman | us | aid deal | economy | stimulus | pandemic

Paul Krugman: US Needs 'Really, Really Big' Aid Deal to Save Economy  

By    |   Thursday, 05 November 2020 11:55 AM

Nobel prize-winning economist Paul Krugman warns that the U.S. economy may need several hundred billion dollars a month in “disaster relief” to stay afloat as the coronavirus pandemic continues to rage.

“We really are still very much in the disaster relief stage,” the economics professor at City University of New York’s Graduate Center told CNBC.

“A lot of people are going to be out of work, a lot of businesses are going to be stressed. We need to just make life tolerable for them,” he said.

He said it’s difficult to put a total price tag on an ideal relief package for the U.S. But he stressed that a “really, really big” one is needed given that the U.S. hasn’t managed to contain the virus.

“We’re still 11 million jobs down from where we were before this thing hit and all of those people are without wages, state local governments are in extreme financial distress, thousands of businesses — maybe hundreds of thousands — are on the verge of collapse,” he said.

“So, we need a lot to keep this thing afloat.”

And while it's still not clear yet if the next U.S. president will be incumbent Donald Trump or Democratic challenger Joe Biden, whoever triumphs will face monumental challenges on the economic front, Reuters said.

The recession has been ugly. It has wiped away more than a year of economic output and more than five years of jobs growth, according to the Reuters analysis. The workforce is now smaller than it was a year before Trump first took office.

One bright spot - consumer spending - is stronger than it was right after the pandemic exploded in March, but still only back to where it was last June.

Housing prices are on the rise, which is a great thing for U.S. homeowners but at the same time is worsening the affordability crisis for aspiring home buyers.

Manufacturing activity - a key concern in the Midwestern battleground states - has rebounded, but manufacturing employment is in worse shape than employment overall.

And the coronavirus is still surging across most of the United States. Nearly 6,000 people died last week, and there's growing concern that the U.S. might need to reinstate lockdowns that happened across Europe in order to get it under control.

But despite signs the economy has begun to slow again amid another viral onslaught, "it is almost certain that the economy will get better over the course of 2021," says Jason Furman, a key economic advisor to Barack Obama, the last U.S. president elected during a time of economic turmoil.

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Nobel prize-winning economist Paul Krugman warns that the U.S. economy may need several hundred billion dollars a month in "disaster relief" to stay afloat as the coronavirus pandemic continues to rage.
paul krugman, us, aid deal, economy, stimulus, pandemic
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2020-55-05
Thursday, 05 November 2020 11:55 AM
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