Boots & Sabers

The blogging will continue until morale improves...


Everything but tech support.

0854, 09 Apr 20

Uncertain Pace of Economic Recovery

I agree that it won’t snap back as fast as it fell.

“Anyone who assumes we’re going to get a sharp snapback in activity isn’t thinking about how consumers are going to feel. They’re going to be very cautious,” said Nariman Behravesh, chief economist at IHS Markit. “Households and businesses have seen their finances deteriorate. People are buying groceries on their credit cards.”

To understand the consequences of a sudden negative shock on the economy, Behravesh studied how many people returned to flying after the Sept. 11, 2001, terrorist attacks.

“It took two and a half years for airline passenger traffic to go back to previous levels,” he said.

The other thing to remember is that many Americans lost 25%-50% of their net worth through the decline of the equity markets, loss of jobs, etc. They are more likely to spend much more cautiously as they rebuild their assets for the next few years. With an economy driven by consumer spending, the recovery will proceed at the same pace as the people’s willingness to spend.


0854, 09 April 2020


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