Over a normal two-week period we’d expect around half a million U.S. workers to file claims for unemployment insurance. Over the past two weeks we’ve seen almost 10 million filings. We’re facing an incredible economic catastrophe.
The question is whether we’re ready to deal with this catastrophe. Alas, early indications are that we may be handling fast-moving economic disaster as badly as we handled the fast-moving pandemic that’s causing it.
The key thing to realize is that we aren’t facing a conventional recession, at least so far. For now, most job losses are inevitable, indeed necessary: They’re a result of social distancing to limit the spread of the coronavirus. That is, we’re going into the economic equivalent of a medically induced coma.
This means that the principal job of economic policy right now isn’t to provide stimulus, that is, to sustain employment and GDP. It is, instead, to provide life support – to limit the hardship of Americans who have temporarily lost their incomes.
There is, to be sure, a strong risk that we’ll have a conventional recession on top of the induced coma. But for now, the focus should be on helping those in need.