• University of the Pacific economist says COVID-caused contraction could be worse than 1929 crash
• “The impact on small businesses is just phenomenal”
Total Recorded Time (TRT) 11:08
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An economist who has spent much of his career researching the financial aspects of the health sector says the economic contraction caused by the COVID-19 pandemic may very well be leading to a full-blown recession.
Peter Hilsenrath, who holds the Joseph M. Long Chair of Healthcare Management and is professor of economics at the University of the Pacific in Stockton, says “it has impacted much more than I had anticipated.”
He says the classic definition of a recession – two consecutive quarters of negative gross domestic product growth – could likely be confirmed following the third quarter, if not sooner, after the second quarter.
Mr. Hilsenrath says the current contraction is certainly far more than numbers on a chart: it is also about the lives, fortunes and futures of people, many who own or work for small businesses.
“Initially people are going to start to have liquidity problems; there’s just no cash flow,” he says. “but that can quickly turn to solvency problems.”
Mr. Hilsenrath says owners of businesses – small or large – need to move quickly to tap into the loans and other funds the federal government and Federal Reserve ares trying to offer. “I realize it may be difficult to access that but I would certainly try because that could be a real lifeline until such time as things normalize,” he says.
Trillions of dollars have already been dumped into the nation’s economy by both the Federal Reserve and the federal government. But will that be enough to restart the economy and get most if not all of the nearly 17 million suddenly jobless back to work? The University of the Pacific economist has some doubts – and grim humor.
“It’s like a trillion dollars here and another trillion there and we’re talking real money, but I do think more will be necessary,” he says. “The impact on small businesses is just phenomenal.”
But are the current times just like those that led to the Great Depression? Perhaps not. Listen to Peter Hilsenrath in this CVBT Audio Interview Podcast here:
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