Less than two months into a partial lockdown in response to the coronavirus pandemic, the country has begun to feel the economic squeeze. Many industries remain shuttered. Unemployment may be approaching record highs. And while Congress has dispensed trillions of dollars toward helping businesses stay afloat, economists say we’re still on the brink of a financial crisis unlike any we’ve seen in modern times.
“What we’re doing these days is something completely different in terms of scale,” says Robert J. Barro, an economics professor at Harvard University. “We’re trying to counter the spread of the disease by having an even sharper economic contraction that we’re basically engineering in the short term.”
Still, previous economic crises can bring perspective to this new challenge, especially in terms of the changes brought on by financial collapse. The Great Depression, for example, paved the way for new economic ideas even as it transformed the outlook of an entire generation. And while we’re still feeling the aftershocks of the Great Recession, we also see evidence of recovery and renewal.
“We’re living through something that past generations have lived through,” says Timothy Taylor, managing editor at the Journal of Economic Perspectives. So, he adds, “You change some patterns. You do other things. And then we kind of hope that in some period of time ... maybe we can be down the other side of the curve.”
You can watch previous installments of “Precedented” here.
Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.