US Now in Recession Expected To Last Until September, UCLA Forecasts
Speaker 1: 00:00 It's not just possible, it's happening. Economist at UCLA is Anderson school of management, say the U S economy is already in a recession in an unprecedented step. Anderson revised a forecast issue just last week to reflect the profound impacts coronavirus restrictions have had on the economy. And the updated forecast predicts the recession lasting at least until the end of September. John to me is Jerry Nichols Burke, he's director of the UCLA Anderson forecast. And Jerry, welcome to the program. Speaker 2: 00:34 Good afternoon. Speaker 1: 00:35 So what made the economist said Anderson revised their forecast so quickly. Speaker 2: 00:41 The forecast that we released a week ago was a forecast that was actually done several weeks ago. We put together our forecast and it's, you know, rather complicated process of doing a national and state forecast and making sure that we think we have it right, but events over the last a week and a half or so, it moves quite fast. And we've seen a shutdown of restaurants, a shutdown of retail establishment, uh, cancellations, massive cancellations of, uh, tourism and of transportation on aircraft and the, um, uh, transportation across the Pacific and across the Atlantic. Uh, all is impacting tourism. So in light of this, these fast moving events, we felt it important that we incorporate those into a new forecast. And well, when we did, it was pretty clear to us that we've already answered a recession and this is going to last for a while. Speaker 1: 01:48 How deep a recession do you say we're in now and how deep Speaker 2: 01:52 will it get? It is important to realize that any forecast of a recession right now is going to depend on the course of this pandemic. So we had to make an assumption and our assumption was in part based on what's happened in South Korea and in China, that the pandemic will have run its course by early summer and then we will begin to, uh, get back to normal, although that will take some time. That gives us a recession that lasts through the third quarter of this year. The third quarter is, uh, is July, August, September, and the second quarter. The one we're about to answer with the beginning of April, we're expecting national GDP to decline by 6.8%, followed by a further decline in the third quarter of 1.9%. Speaker 1: 02:47 How high do you predict the unemployment rate will get? Speaker 2: 02:50 So we're looking at the, you know, kind of importantly for California California's unemployment rate to get up to 6.6% for U S uh, approximately 2 million jobs will be lost in this recession. And our forecast for California is that we'll have a higher than average job loss of about 300,000 jobs lost in the state, pushing us up to that, uh, four minutes and 6.6%. Speaker 1: 03:16 Why is California particularly vulnerable to this Corona virus downturn? Speaker 2: 03:22 The reason why California is more vulnerable is that California is, uh, blessed to be a state that people want to come and visit. So we have a larger than average, uh, leisure and hospitality industry that includes, uh, tourism. So that's, uh, restaurants and entertainment and, and hotels. Uh, then the U S on average and tourism has just collapsed [inaudible] as well. Other aspects of leisure. And hospitality. Also, California is the port of entry or manufactured goods coming out of Asia, and that's ground to a halt. So our transportation and logistics industry is hit harder as well. Speaker 1: 04:07 President Trump has just proposed an $850 billion stimulus package, which includes sending checks directly to most Americans. Here's treasury secretary, Steve Mnuchin, Speaker 3: 04:19 the payroll tax holiday. We'd get people money over the next six to eight months. We're looking at sending checks to Americans immediately. And what we've heard from hardworking Americans, many companies have now shut down, whether it's bars or restaurants. Americans need cash now and the president wants to get cash now. And I mean now in the next two weeks, uh, I will be previewing that with the Republicans. There's some numbers out there. They may be a little bit bigger than what's in the process. Speaker 1: 04:47 So what's your reaction to that plan? Speaker 2: 04:49 The, uh, sending a check to individuals that may will be a very good thing. Uh, it happened in 2008 under president Bush. And the best evidence suggests that in 2008, at the end of that time, uh, only a third of that went into, uh, into demand for goods and services and the other two thirds was safe. That, that might be good. That might be bad, but I think, you know, more, uh, analysis needs to happen and hopefully it is happening right now in Washington. Speaker 1: 05:24 What else could the federal government do to stimulate the economy? Speaker 2: 05:29 Uh, so, you know, so this is, is a very good question. Uh, if we think about, uh, let's say the seven County Bay area that is unfree week, um, a shelter in place orders, I guess you would call them, uh, you know, how, how would you stimulate that economy during the three weeks? I think that's an open question. We have not had in recent times the pandemic induced recession. And so there's much that we don't know and then we don't have data on. Uh, and, and, you know, is it possible with macro economic policy to stimulate the recession, or, you know, as, uh, was kind of indicated in the clip that you just played? Is it a matter of, uh, helping people get Pruitt, uh, but not much in the way of stimulus. So a lot of bubbling questions that we can't answer at this point in time because we just don't have the data. I've been speaking with Jerry Nichols Berg, he's director of the UCLA Anderson forecast. Jerry, thank you very much. You're welcome.
