The coronavirus has plunged the U.S. economy into a depression, according to a one-time chief economist at the U.S. International Trade Commission who is now affiliated with University of Maryland.
“The U.S. economy is in a depression. That is a recession from which it cannot easily recover,” Peter Morici, a professor emeritus at UMD’s Robert H. Smith School of Business, told MarylandReporter.com in a phone interview on Friday.
“In the weeks since the coronavirus broke, our political and business leaders have dickered and dallied. And now they reap the whirlwind —our citizens and workers be damned.”
Morici elaborated on that point.
“This simply did not have to be this bad. But it is likely going to get worse and last a long time. The recovery will be slow. Businesses will be permanently closed. Millions of workers will lose their jobs.
“The stimulus package is wholly inadequate…It does no good to get a tax break if you have no customers.”
Morici was asked to respond to the March jobs report that was released by the U.S. Department of Labor’s Bureau of Labor Statistics on Friday. The report said that 701,000 jobs were lost during that month and that the unemployment rate is at 4.4 percent. Those numbers stand in stark contrast to the February report, which said 273,000 jobs were gained during that month and that the unemployment rate was at 3.5 percent. Maryland’s employment numbers for March will not be available until April 17.
The Dow Jones Industrial Average dropped nearly 7,000 points in March. The rapid plunge follows the longest bull market in U.S. history and the Dow’s strongest performance ever. The S&P 500 and NASDAQ indexes also have plummeted during the past month. However, all three major stock indexes were up as of 11:30 a.m. EDT on Monday. And some economists say that the market may have already gone as low as it is going to go.
Mike O’Halloran, who is Maryland state director of the National Federation of Independent Business, called the numbers in the jobs report “stunning.” But O’Halloran said what the report omits is even more disturbing.
“Frankly what’s even scarier about those numbers is it really doesn’t take in the last two weeks of the month, when unemployment insurance claims skyrocketed into the millions. We’re staring down the barrel of the course of two months — March and April — a decade worth of employment increases completely wiped out.”
O’Halloran was asked what the numbers mean for Maryland businesses.
“Maryland is fortunate in one regard in that our labor market is somewhat insulated from national trends because of our relationship to the federal government. But for those in the private sector —our small businesses, our mom and pop shops — they’re gonna get hit hard. We’re already seeing it. I’m already hearing it from our members.”
O’Halloran was asked about the possibility of an economic depression.
“I think it’s absolutely possible…you have the trademarks. And if you look at the jobs report and some of the articles out there…the trademark businesses are laying off folks in the thousands. And these are companies rather that you would figure have cash reserves…small businesses are not only laying off folks but they’re having to close their doors.”
Cailey Locklair, president of the Maryland Retailers Association, called the numbers in the jobs report “staggering” and said members of her organization “fear they will continue to increase.” Locklair said the current situation is without precedent.
“The fact is there is no manual to navigate this situation as it is unprecedented. Retailers are doing the best they can to manage restrictions to keep their employees and consumers as safe as possible. Our job has been to provide as much support, guidance and information we can- it’s all hands on deck.”
Gov. Larry Hogan has issued a series of executive orders aimed at curbing the spread of the virus in Maryland. The orders include a stay-at-home directive, closure of all non-essential businesses and restrictions on the number of people attending events. There are 4,045 confirmed cases of the virus in Maryland as of Monday morning, according to the state’s Department of Health, and at least 91 people in the state have died from the virus.