Announcer:
Well joining us now is Andrew Busch. He’s an economist and former chief market intelligence officer for the U.S government joining us from Chicago. And Andrew you described this announcement by President Trump extending these social restrictions up until the end of April as a gut punch for the economy. Can you be a little, what is the gut, quantify that a little more concretely what are we looking at here?
Andrew Busch:
Yeah, I had it in all my models the gut punch, right? No, what it really was is so many people were expecting better news from the president because he had hinted that perhaps they would get the economy back up and running before Easter but that clearly is not the case. In the models from the CDC and from the coordinator of the strategic task force Brix has come out and said that they’re expecting some very large numbers of deaths in the United States, somewhere between 100,000 and 200,000. So clearly they have convinced President Trump that reopening the economy is not a good idea and that it needs to be delayed and that’s what we’re seeing. And we’re seeing pretty much the markets are taking this in stride which is a little bit surprising considering what that actually means for the U.S. Economy is quite catastrophic
Announcer:
Right. Now Andrew we’ve got some unemployment figures coming out at the end of the week but you’ve done, I also saw that you crunched some of the data. You’re seeing perhaps a 5.8% unemployment rate. This is just a start but let me ask you in this stimulus package, in the program that we see is the government ready to deal with that and maybe beyond is all the protection maybe in place that we need for those people who are going to be out of work?
Andrew Busch:
Well I don’t think, I mean it depends on how long it goes on. That’s why we are so keenly interested in when you can see the infection rate go down and then maybe get a timeframe of when you can open up the U.S. economy. Look, this is all about a race against this virus in the sense that if you can obviously flatten the curve which is what everybody’s talking about then you’ve got a chance at really controlling it. But it’s more than that, it’s really a race to get U.S. hospitals to have enough capacity to deal with the surge that’s coming. And that means being able to provide them with the PPE gear that they need to treat people but also the test kits, these five minute test kits that have been developed will really help significantly lower the infection rate. And they’ll also let us know how many are in that pool of actual infections.
Andrew Busch:
So with that going on what I’m keenly watching is the therapeutic work that’s being done and they’re coming up with a wonderful combination of drugs that supposedly from what I’ve seen … And there was a study done in France on this with about 80 patients so clearly not enough but from that study and the use of two drugs in particular they’re seeing a dramatic [crosstalk 00:03:01]
Announcer:
Andrew, let me ask you though you’re striking some optimistic notes there. If we do see some containment or easing say by the summer or over the summer how quickly will the U.S. economy recover or are we heading to a few quarters of recession here?
Andrew Busch:
Without question we’re going to be in a recession if not a depression for the second quarter going into the third quarter depending on how long we’re going to be at this. And when we reopen the economy it’s not like we’re going back to things that were happening at the beginning of January. This is a vastly new world that we’re going to enter. There will be significantly higher costs for businesses, all businesses as they reopen so you can imagine that their earnings are going to take a hit because of that and the market’s got to adjust to this.
Announcer:
Right. So this stimulus package maybe is a bridge to getting to that period. What measures do you see the government is going to have to take to minimize the period maybe even after we see a decrease in the coronavirus cases?
Andrew Busch:
Right. So there’s a lot of internal financial instruments and structure that the Fed’s addressing which is great. There’ll be able to backstop a lot of the things that are going on from that standpoint. We’re keenly interested in watching what happens with commercial real estate, that’s under duress right now. You’ve seen high yields blow out not only for commercial real estate but of course for energy. So looking forward past the next three or four months I would say it’s really just, it gets back to time. Can you get the economy going back and then can you provide enough support within the economy to keep it on its legs to drive forward? The thing that really worries me is not the ability of the U.S. Government to do this but it’s really globally the ability of all the governments to work together. I worry significantly about places like India or Bangladesh or Pakistan or any of the smaller, less developed countries that are out there. They’re going to see significant duress and deaths in those countries and that really concerns me.
Announcer:
Briefly Andrew, do you think that may cause the Trump administration to rethink some of its trade strategy? Because as you’re saying really the U.S. is going to need some global markets to pull out of this.
Andrew Busch:
Well, I don’t know about that. Overall I would say we’re on a track to become more internally focused. The rest of the world is doing the same thing. It’s going to make people really try to figure out what their supply lines are like. Should you be so dependent on China? Probably not. And we’re already starting to see some shifts but one would hope that the world comes together to solve not only the crisis with the virus but also to figure out how best to have the most efficient flows of capital and how to help other countries because they’re going to need it.
Announcer:
All right. We’ll certainly this is going to have to be a global effort at recovery when this, at least the health crisis starts to ease a little bit. Andrew Busch from Chicago thank you for joining us on I24 news.
